A measure to cut sales taxes on groceries cleared a hurdle to advance in the Oklahoma Legislature. Touted as cost savings to Oklahoma families, the proposal has had municipalities WORRIED because Oklahoma’s cities and towns largely operate off of sales tax revenues (such as at the grocery store).
Here’s some information that should alleviate some of that concern. The measure to cut the sales tax only applies to the amount taken by the STATE, not the local sales taxes. The issue came up informally at the Town of Luther Board of Trustees’ February meeting earlier this week as part of a discussion about challenges to funding municipalities as sales taxes are the main source of tax revenue that funds the operation of Oklahoma’s towns and cities.
“This legislation does not affect the budgets of municipalities.”State Rep. Emily Virgin regarding HB 3621
Here is a news release sent Thursday on the measure, via the Oklahoma House:
NEWS RELEASE: Elimination of State Grocery Tax ‘Sales’ Through Committee
OKLAHOMA CITY — A bill to provide relief to Oklahoma families at the grocery store unanimously passed the House Appropriations and Budget Subcommittee on Finance on Wednesday.
House Bill 3621, authored by House Minority Leader Emily Virgin, D-Norman, phases out the 4.5% state portion of the grocery tax over three years:
- 3 percent, starting July 1, 2022
- 1.5 percent, starting July 1, 2023
- Fully exempt from state sales tax effective July 1, 2024
Democrats called for the end of the grocery tax last session in their 2021 Oklahoma Focused Budget. This session, the initiative has found bipartisan support from members of the House, members of the Senate, and the Governor.
“Two of the top priorities of the House Democratic Caucus this year are to eliminate the state portion of this tax and to increase the state earned income tax credit,” Virgin said. “These two things are realistic ways the Legislature can help Oklahoma families recovering from the pandemic.”
Virgin held a study over the summer on eliminating the tax. One of the biggest questions raised during the study was how legislation to eliminate the state tax would affect taxes levied by cities and towns that rely on the sales tax for revenue.
“This legislation does not affect the budgets of municipalities,” Virgin said. “As state lawmakers, we are only interested in ending the state’s 4.5 percent tax on groceries. I strongly believe that cities and counties should have the autonomy to set their own tax rate just as I believe they should have the autonomy to raise the minimum wage.”
To provide input on the legislation, contact House Minority Leader Emily Virgin at (405) 557-7323 or email [email protected].
At the Luther meeting, Town Attorney Beth Anne Childs characterized fixing infrastructure as “hideously expensive.” That was part of a larger discussion about the cost of an additional water tower in town, that would cost upwards of a half-million dollars, she said.
If the measure to eliminate the state sales tax becomes law, consumers would still pay a local sales tax on groceries. In Luther, that is about four percent.