US Food Tax Falls

Starting January 1st, you'll be paying a little less for your food purchases.

The food tax has fallen from 3 cents per dollar to 2 cents. Buy $100 worth of groceries and you'll save $1 in taxes: Paying $2 instead of $3, although that the tax cut doesn't apply to prepared food.

If you buy a raw chicken at the grocery store, the tax cut applies. If you buy a roasted chicken, it doesn't apply.

State budget officials have calculated that every 1-cent drop in the food tax saves an average household about $50 a year -- the price of one pair of shoes at some stores.

Alix Evans, outreach coordinator for the Raymond Wolfe Center, in Kingwood, said the cut should help her agency's clients buy more of what they need.

The center's food pantry has seen its numbers climbing, and served 700 people in December -- the highest number of the year. Many clients are elderly or disabled and all still have to buy basic staples such as milk and bread.

It won't reduce the number of people calling on the center for help, she said, but "every penny helps."

Tammy Laney, coordinator of Food for Preston had similar views. "Any decrease is wonderful for everyone," she said, but she doesn't foresee a decrease in the number of families served by its 10 pantries across the county. In 2011, Food for Preston helped more than 1,500 individuals a month -- up dramatically from just fewer than 1,000 a month in 2010.


The tax cut will cost the state $26 million to $27 million a year. State Budget Director Mike McKown said there are no planned tax increases to offset the loss. There will just be that much less revenue growth.

The tax is set to disappear entirely in two more stages.

On July 1, 2012, it drops to 1 cent per dollar.

Then, on July 1, 2013, it vanishes if a certain condition is met. The Rainy Day Fund must be at least 12.5 percent of the General Revenue Fund as of July 1, 2012 -- the beginning of the 2013 fiscal year. If it isn't, the tax cut is suspended until it reaches that level; the final cut would then take effect at the beginning of the next applicable fiscal year.

"That'll be wonderful," Evans said about that day in 2013.