Cutting grocery tax eats into states' coffers

By: Associated Press
By: Associated Press

States looking to cut grocery taxes are running into a serious obstacle: their own desperate need for income amid the recession.

In Alabama and Mississippi, the issue comes up nearly every year but has yet to overcome opposition from Republicans, despite their general support for tax cuts. The vast majority of states either don't tax groceries, tax them at a lower level than other purchases or offer a credit to offset the tax for some residents.

Alabama Arise, an advocacy group for the poor, estimates that a family of four in that state typically pays $468 a year in grocery taxes.

Alabama lawmakers are looking at two proposals for cutting the 4 percent tax. 45 states levy a general sales tax, but 30 exempt food to be eaten at home. Other states tax groceries at a lower rate or offer credits or rebates, primarily for low-income taxpayers. Only two states -- Alabama and Mississippi -- apply their full state sales tax to groceries without relief for low-income families.

The Grocery Manufacturing Association said it supports the concept but has not actively campaigned for the cuts.

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