The Times West Virginian

July 3, 2013

Elimination of food tax helps keep money in people’s pockets

Times West Virginian

— The next time you go to the grocery store, you might notice a slight savings on your receipt.

It won’t be because of the sales going on that particular week, although that might make a difference, too.

And the savings won’t be due to your dedicated coupon clipping, although we’re sure those coupons help you stick to a budget.

The savings will occur thanks to the elimination of the food sales tax in West Virginia, which took effect Monday.

“For too long West Virginians have been burdened by a regressive tax on one of life’s basic necessities,” Gov. Earl Ray Tomblin said. “The elimination of the food tax allows families to keep more of their hard-earned money.”

The elimination of the food tax started as a phase-out system in 2005. That’s when Tomblin and then-Gov. Joe Manchin initiated the plan to reduce the 6 percent food tax. It’s been steadily reduced since then, hitting 3 percent in 2008 and 1 percent last year. In 2011, Tomblin signed legislation that established a plan to eliminate the food tax by July 1, 2013.

Prior to the elimination of the food tax, some of the money generated by the tax was going to the state’s Rainy Day Fund. As Tomblin explained, in order to eliminate the food tax, West Virginia had to balance its budget. When the Rainy Day Fund reached 12.5 percent of the General Revenue Fund at the end of December 2012, state leaders were able to take the final step to eliminate the food tax.

Of course, a 1 percent reduction might be tough to notice, and if you don’t notice the savings on your first grocery shopping trip after the elimination of the food tax, you’re more likely to notice it by the end of the year. Estimates show that the average family of four can expect to save $52 this year thanks to the 1 percent reduction.

Still having trouble recognizing the savings? If you factor in the reductions that have taken place each year since the phase-out began in 2005, West Virginia families have collectively saved a whopping $162 million a year. For most families, that represents an average of 18 days of “free food.”

The food tax was started in 1989 — it passed in the Legislature after Gaston Caperton became governor that January.

It’s worth noting that at that time, West Virginia was $230 million in debt and the state had lost $279 million in investment funds. Most West Virginians remember that after he took office, Caperton called for $339 million in tax increases, and that figure included the 6 percent tax on food sales.

Caperton was quite firm in addressing the West Virginia Legislature, telling the members exactly what the state needed. And state lawmakers passed his request.

That 6 percent increase stood until 2005, when Manchin began to whittle it down, saving the last 3 percent for Tomblin to chop from the budget.

As of Monday, that last single percentage was gone.

And the benefits stretch further than just the average family’s bank account. As Acting State Tax Commissioner Mark Matkovich explained, the elimination of the food tax is part of a larger effort to make the tax system fairer, efficient and balanced for businesses, too.

“Gov. Tomblin’s actions have leveled the playing field for businesses in our border counties and given them a competitive advantage among our neighboring states,” Matkovich said.

In an economy that is still struggling since it climbed out of the deep recession a little more than four years ago, every penny counts. For families living on a budget, stretching each paycheck can be one of their biggest worries.

It’s likely this latest tax reduction will be a welcome sight for many families in the Mountain State.