Local governments monitor House bill that may eliminate sales tax on food
COLUMBIA, Mo. (KMIZ)
City of Columbia officials estimate the elimination of sales tax on groceries will cost $10 million in its first year.
House Bill 432 is making its way through the Missouri Legislature and is now awaiting a committee assignment.
If passed, HB 432 will remove sales tax on food. This tax elimination will apply to establishments that get less than 80% of their revenue from prepared food, this typically applies to grocery stores. Restaurants and ready-to-eat foods will still be taxed.
The bill is sponsored by Rep. Will Jobe (D-Independence). The loss in revenue will hit local government budgets. In a City Council budget work session, Monday the the finance department of the City of Columbia presented their findings of the bill.
According to meeting documents, food-related sales tax will bring in around $10 million during the 2026 fiscal year. For the current fiscal year that ends Sept. 30, the city approved a total budget of around $539 million.
City Finance Director Matthew Lue said that the bill may take resources away from city programs like emergency or infrastructure services.
"If we did not have revenue to make up that 10 million, we would talk about cuts, cuts to services such as police, fire, streets," Lue said.
City spokeswoman Sydney Olsen said the city's financial department has been tracking impacts.
Lue added the bill is not a major issue at the moment, but the city has contacted local legislators to voice their concerns.
"What we are doing is reaching out to our representative and our senator and trying to educate them on what that impact will be to us," Lue said.
Ward 2 Councilwoman Lisa Meyer wrote in an email that she would support a decrease in the tax and at the meeting, she pushed how the bill could also be beneficial to lower-income citizens.
"It's important that we're mindful of that, especially with the high cost of inflation and food costs, it's important that we're mindful and we think about the big picture," Meyer said.
Boone County's Presiding Commissioner Kip Kendrick is also wary of the bill. The Boone County Auditor's Office estimates that the bill would likely cost the County around $8.5 million annually.
"Eliminating this sales tax at the local level without the state finding alternate funding streams for local governments, would be detrimental to basic services such as public safety, road and bridge infrastructure, and other local government services," Kendrick said in an email.
Jefferson City is in a similar position as Columbia, and will continue to monitor the progress of the bill. Mayor Ron Fitzwater is not confident the bill will pass.
"It has not been well-received in the past but that doesn't mean that there aren't people looking at it this year, so, we'll watch it, we'll continue to monitor, but as it has not reached 'crisis' stage yet," Fitzwater said.
