New research report examines Initiative 1634: ban on local food and beverage taxes “in keeping” with historical state tax policy

The Washington Research Council has released a new policy brief analyzing Initiative 1634. The WRC states,

Initiative 1634 would ban local taxes on groceries (except insofar as they are subject to general state and local retail sales taxes). Although the impetus for the initiative isSeattle’s sweetened beverage tax, that particular tax would be allowed to continue.No other jurisdictions are considering grocery taxes at this time, but the proposal is in keeping with Washington’s long history of exempting most groceries from state andlocal retail sales taxes.

The short brief looks at the history of the grocery exemption.

Washington voters exempted food products from retail sales and use taxes in 1977 (Initiative 345). The Legislature then temporarily re-imposed the sales tax for food in April 1982, through June 30, 1983 (Chapter 35, Laws of 1982, 1st ex.s.)…

In 2010, the Legislature applied the sales tax to prepared food, soft drinks, bottled water, candy, and dietary supplements. The legislation also imposed an excise tax on carbonated beverages. Voters responded that November by passing Initiative 1107, which again exempted bottled water and candy from the sales tax and repealed the carbonated bever- age excise tax (WRC 2010).

And addresses the question of the regressivity of the tax.

I-1634 states that a reason for its proposed ban is that grocery taxes are re-gressive and “working families in Washington pay a greater share of their family income in state and local taxes than their wealthier counterparts.” This statement is likely based on a report on state and local taxes from the Institute on Taxation and Economic Policy. We wrote last month about this report’s methodological problems, which lead it to overestimate the regressivity of Washington’sstate and local taxes. Ultimately, all state and local tax structures are regressive, and when the progressive federal in-come tax is factored in, Washington’s overall tax burden is progressive (WRC 2018).

It’s a quick and informative read. We recommend it.