Don’t add extras to budget by axing exemption on food

  • Thursday, November 29, 2012 3:29pm
  • News

It’s budget time, and Homer City Council
members have a tough job finding the balance between community needs (the bare essentials) and community wants (the things that contribute to our quality of life). Those decisions to cut services or raise more revenue by increasing taxes or user fees or some combination of the two aren’t easy, because they always hurt someone.

Currently before the council are two proposals: one to eliminate the seasonal sales tax exemption on nonprepared food items and another to modify it so foods like frozen dinners, candy, chips and other snack foods, sodas and energy drinks would be taxed.

Eliminating the sales tax exemption entirely would put about $1 million into the city’s coffers. It’s not known how much modifying the exemption would raise, but given the nation’s rise to obesity, it’s a reasonable guess that taxing unhealthy foods could generate a significant amount of cash for the city. Our take on that proposal is that it is too complicated to be implemented. 

At first glance, eliminating the sales tax holiday on food seems to be an easy, almost painless, way to raise money for the city. It hits everyone equally — rich and poor, young and old, residents and nonresidents. Surveys show a family of four — two adults and two children — spends about $165.30 a week on groceries. Adding back sales tax would mean an additional $7.44 a week — or less than $300 a year (that doesn’t include the months Homer residents already pay for sales tax on food).  

All those $300 add up to real money for the city, and, some would say, residents don’t feel the bite very much. The council, perhaps, could take care of at least some of the city’s needs and wants just by eliminating the sales tax holiday.

And it might be an acceptable move if the idea for the sales tax exemption on food had originated with the council and been instituted solely by council action.

But that’s not what happened.

It was a citizen initiative that first brought the idea to Kenai Peninsula Borough voters, and Homer voters approved it. When other cities within the borough decided to opt out of the exemption, as was their right, the Homer City Council put it to another vote of the people. Homer voters again supported the tax exemption.

There’s a principle at stake here. What’s the value of a citizen vote? Is it worth $1 million to the city to ignore what their citizens have told them, not once, but twice?

Maybe there are lots of ways to interpret those votes, but our interpretation is this: Homer residents don’t want to be taxed on food. Don’t do it. Period.

Yes, the tax exemption may be largely symbolic, but what it symbolizes shouldn’t be ignored. If the people’s vote doesn’t mean anything when it comes to a sales tax exemption on food, why should it mean anything at all, in any vote? One of the reasons for disgust with government in general is the tendency of some elected officials to act as if they think they know better than the people who elected them. That’s what the council is doing now by considering resurrecting the food tax.

And consider the current effort to get a citywide natural gas distribution system built. It’s estimated that the assessment for that will be $400 annually; not having to pay sales tax gives many residents about 75 percent of what they need for the assessment.

If the citizens who support the sales tax on food really believe it’s the best way to help Homer survive and thrive, then they should start a citizen initiative and get the issue on the ballot next year. Maybe times have changed and the third vote on the issue would yield different results. But it should be citizens, not council members, who drive the effort to put the issue on the ballot. 

Lifelong resident Ray Kranich summed up the council’s dilemma best in public testimony Monday night: “Even though I know the city can use the money, the city can always use the money.  The people have spoken twice: They don’t want that tax on foods.”

Amen to that. The council needs to look elsewhere to fund the community’s wants and needs.

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