As the nation heals from the tragic event in Charlottesville, it is essential that we keep an eye on local issues in preparation to turn out the vote in 2018. In this series, we’ll focus on particular policy proposals to better prepare and inform voters.

The Path to 2018: The Grocery Initiative

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What is the initiative?

Yes! Keep our Groceries Tax Free is an initiative aiming for the 2018 ballot. Its mission is to add an amendment to the Oregon Constitution preventing groceries from being taxed at every point of food sales — from production, processing, wholesale and retail, with the exception of meals served at restaurants.

The ballot initiative specifically targets the taxation of “raw or processed food or beverage intended for human consumption,” excluding alcohol, marijuana, and tobacco products. The initiative would apply to goods acquired from a licensed grocer, farm stand, farmer’s market, or food bank. It would also sink the proposed tax on sugary sodas, as it would be considered one of these processed foods.

According to the Center on Budget and Policy Priorities, thirteen states tax grocery sales. Of the 13, all but three (Alabama, Mississippi, and South Dakota) offer assistance to offset these taxes.

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A 1998 report from the Center found that taxes on food often place unnecessary burdens on low to median-income households. Additionally, taxes on food do not necessarily generate enough revenue to cover state entitlements. The findings of the study indicate “food purchases in the economy as a whole are declining as a share of total consumer spending.” To remedy these problems, many states have enacted lower taxes on groceries or government subsidies to offset costs.

However, this study focuses on sales taxes, not a gross receipts tax. If a gross receipts tax were imposed, it would be the grocers passing this cost along to its customers rather than the state imposing a direct tax on the consumer,

Who’s behind it? 

The initiative is co-sponsored by Ron Brake and Syd Hannigan, both of whom have a background in grocery sales. Hannigan has a background in food marketing and previously worked in the Safeway corporate office. She retired from the food giant in 2011 and currently serves on the Board of Directors at the Oregon Food Bank. Brake owns two “Food 4 Less” grocery stores, also serves on the Board at the food bank and is the owner of Marketing Concepts — a sales representation agency that serves Kroger Companies, Fred Meyer, Costco Wholesale, Amazon, Safeway Stores, Bi-Mart, and other northwest retail organizations.

Brake recently spoke to X-Ray in the Morning’s Jefferson Smith to discuss the initiative:

“We have so many people that are having such a difficult time just paying their food bill today. We have many people that have hunger issues in Oregon. And the bottom line is, the legislature continues to come at us — the voters — to get more and more shots at taxing groceries” said Brake. “It doesn’t matter what food where, the bottom line is we want to stop all taxing of food, so Yes! Keep Our Groceries Tax Free is designed to do exactly that.”

Why now? 

Announcements of the initiative came as legislators in Salem began discussing the possibility of implementing a corporate income tax in order to close the budget gap created by PERS and other state entitlements.

Corporate taxes have remained a contentious issue in Oregon. Amidst the national political turmoil of the 2016 election, another campaign gripped Oregon voters. Measure 97 proposed a removal of the corporate gross sales tax cap and increasing taxes on C-corporations making $25 million or more in gross sales. Though it was defeated in the polls, the measure was the most expensive campaign to date in Oregon politics. The No on 97 campaign alone raised $28.13 million — its top three donors were Albertsons Safeway, Costco, and Kroger. 

In response to the initiative, a spokeswoman for Our Oregon Katherine Driessen said the grocery tax ban is truly “about padding the pockets of large international grocery chains like Walmart that already receive billions in subsidies from Oregon taxpayers for their low-wage jobs.”  Our Oregon was one of the groups behind Measure 97.

What should voters consider going into 2018?

As the initiative gains signatures, voters will have a few important ideas to consider on the road to the ballot. First, Oregon holds the lowest corporate tax rate in the United States and District of Columbia. Increasing corporate taxes, including those on groceries, could help alleviate the $1.4 billion dollar deficit that the state is currently facing. Especially if Oregon follows the example of other states in providing subsidies or exemptions for essentials such as groceries.

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Studies show that grocery taxes disproportionately impact low to median-income households. Additionally, studies have found that grocery taxes do not provide the long-term tax alleviation. However, these studies focus primarily on a sales tax and do not take a gross receipts tax into consideration.

Moreover, the timing is suspicious, as are the deep pockets and political history of its backers. Despite potentially compelling research and rhetoric, a question still rings out — is this just a clever way to sidestep a corporate tax under the guise of liberal political values?

Radio is yours. 

– M