Excise taxes on vending machine “food” such as cookies could be phased out
Rep. Ober (800-382-9841) has introduced HB 1013 which would eliminate taxes on food sold from vending machines. In the context of sales taxes, “food” has a particular meaning. A lot of what comes out of vending machines (e.g. soda and candy) is not considered “food” and will continue to be taxable. However, some of what comes out of vending machines (e.g. chips, cookies, and crackers) is “food.”
As I understand the current tax law, if you bought the chips from the grocery store, it would not be taxed, but if you bought the same chips from the vending machine, it would be taxed. I can only speculate, but my guess would be that advances in vending machine technology since this tax structure was developed have improved the ability of vendors to separate “food” from “non-food” for tax purposes. It’s probably fair to ask why candy should be taxed while cookies are not; but, I think it makes sense that whether the cookies are taxed probably shouldn’t hinge on whether they came from a vending machine or a grocery store.
The tax would be phased out from the current 7% down to 5% in 2017/18, 3% in 2018/19 and zero thereafter. The fiscal note indicates that this would reduce sales tax revenue by $5.8 million per year once the tax was eliminated.
Not even sure how they tax that, unless the state charges the vendor. If you buy an outrageous $1.00 for coffee, how do you add seven cents?
“All taxes included”. You are paying an outrageous $0.93 for coffee and $0.07 for the taxes.
Similar to gasoline prices which include the tax.
I doubt it this bill is going to make any difference to the consumer. It might keep the vending companies from raising their prices for a couple of years but in the meantime they will pocket that extra 7%,
So why do I have to pay tax if I buy the same bag of chips at Subway?
Because it’s purchased from a restaurant, I think. Non-taxable “food” does not include “food sold with eating utensils provided by the seller, including plates, knives, forks, spoons, glasses, cups, napkins, or straws.”
(I’m not very knowledgeable in this area, so I might be getting that wrong.)
My “why” was more of a philosophical one. The bag of chips is the same whether it comes from a store, a machine, or a fast food restaurant, so taxing it differently based on location doesn’t make sense to me.
It’s convoluted for sure. I think generally, the State wants sales tax money. But, it also felt like it was good policy for people to be able to feed themselves tax free. But then you get into judgments about what’s actually proper and necessary to feed yourself. So, they tax “extravagances” like dining out and candy. But the line between junk food and “real” food is blurry.
I vaguely recall that one of the tax increases from the 4% rate that I recall in the early ’70s (when I was in my 20s and starting to pay attention to such things) to today’s 7% included the exemption for food. Before that food was taxed.
However I could be wrong so would appreciate a correct from someone with a better memory or better web searching skills.