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Government Officials Hunger for More Revenue Through Food Taxes

Food taxes are a hot topic in a period of increasing food inflation. While some states and cities have opted to not tax food sold at restaurants or grocers, other places are moving in the opposite direction.

Recent headlines in Minnesota, Oregon and Utah have focused on food taxes. For example, in Sartell (Minnesota), residents can vote on February 1st to decide if the city will tax food sold at restaurants or bars.

This month in Oregon, a pair of similar ballots were held with mixed results. Newport, Oregon voters rejected a proposed 5-percent tax on food and beverage sold at restaurants and bars. The tax’s supporters claimed it would have brought more than 2 million dollars to the city’s coffers during its first year.

Newport’s mayor had referred to the tax as an opportunity to fix an “impending structural problem.” However, the city proposed that the money be used to pay new staff including a parking enforcement officer and spend $200,000 on grants for businesses to implement the new tax.

Opponents, on the other hand, explained why the proposed tax was unfair—citing everything from the impact of food inflation on residents’ abilities to feed themselves and their families to the effects of COVID-19 and related restrictions on the restaurant industry, which is struggling still to recover.

Mike Franklin, the owner of Newport Chowder bowl, stated that “no industry was more adversely affected by COVID-19 as the hospitality industry.” Newport NewsPrior to last week’s vote.

The restaurant industry has been devastated by mass layoffs, total shutdowns, or reduced hours, restrictions on indoor dining, and higher prices from or insufficient supply.

Cannon Beach is a few hours away from Newport and voters adopted a 5 percent food tax with a slim 52-48 margin. The tax’s proceeds will go towards the construction of a new police station and a city hall.

Shelly Crane who runs the local business Oil and Vinegar Bar and voted against the measure, asked questions about the tax and how the money would be distributed.

“Does a new city hall really exist?”[. D]Is it urgently needed? Crane stated, “No,” Cannon Beach Gazette. They aren’t thinking about the impact this could have on restaurants. “We have all been hard hit by the pandemic.”

Oregon’s municipalities have taken different approaches to restaurant taxation. Utah lawmakers, however, are looking at eliminating the state’s grocery sales tax.

The Center for Budget and Policy Priorities, a Washington, D.C. nonpartisan group that opposes food tax, reports that Utah is among 13 states that tax residents’ grocery shopping. State Rep. Rosemary Lesser (D–Ogden), who’s pushing to repeal the state’s food tax, said she’s worried about the regressive nature of such taxes.

According to Utah Public Radio, “People who live paycheck to paycheck are faced with food insecurity.” She stated that the demands for food don’t change and sometimes people have to decide between having a roof to shelter them and getting food from wherever they can. In a separate op-ed last month, State Rep. Lesser noted, however, that the food tax would “disproportionately harm low-income Utahns” and increase food insecurity.

Similar arguments were raised in Kansas as part of attempts to abolish or lower the state’s tax on food. It’s even a topic of debate in Kansas’s coming gubernatorial election.

Current Democratic Kansas Governor. While current Democratic Kansas Gov. Laura Kelly ran in 2018 with a promise of cutting the state’s food tax. The leading GOP candidate, Kansas Attorney General Derek Schmidt said this last week in comments reported by the Topeka Capital-JournalThis Governor. Kelly failed to repeal the state’s Food Tax. According to the CBPP, it is second in America after Mississippi’s.

Schmidt explained that this issue had been supported by both parties since before Laura Kelly was elected governor. “It’s true that then-candidate Kelly campaigned on this in 2018, and it’s also true that three years into her administration she has completely failed to deliver on that promise.”

For those looking to extract more tax money from consumers, food has been an attractive target since long. In a 2017 column, I wrote that the same factors which make food taxes attractive for lawmakers also make them so repelling to consumers. They are all but impossible to avoid. Everyone buys food. Food taxes penalize everyone who buys food.

Also, I have notedGovernments claiming higher food taxes will not affect consumer prices are untrue. However, those who oppose this claim often prove to be right. When food prices are sky high and countless restaurants are struggling to survive—both the case today—food taxes are particularly unjust and unwelcome. It is important to discuss food taxes in today’s discussion.