The state’s grocery tax would disappear over the next five years under a measure that passed the Senate on Wednesday. Senate Bill 318 passed with a vote of 38-8. The bill would keep county and city sales taxes on groceries but would remove state grocery tax of 4.5 percent. The tax would be reduced by 0.9 percent each year over a five-year period, which could cost the state about $244.8 million. The measure still must pass the House and be signed by Gov. Brad Henry to become law.
The bill’s author, Sen. Mike Mazzei, R-Tulsa, said cutting the state tax on grocery food items would help Oklahomans keep more of their money. The tax would not apply to alcohol, tobacco or candy. Items that can’t be eaten, but can be purchased at a grocery store, would continue to be taxed. Opponents worry about the dent that eliminating the state grocery tax would put in the state’s budget. The state is already facing a $900 million budget hole in the upcoming budget year. Reducing the grocery tax would cost the state about $44.4 million in the first year, according to figures compiled by the Oklahoma Tax Commission. "How are you we going to balance the budget?” asked Sen. Richard Lerblance, D-Hartshorne. Mazzei said he has ideas on ways to cut special interest tax credits, but hasn’t found wide support for those measures. "This can be a way to give relief over time,” Mazzei said.
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AT A GLANCEGrocery tax The average U.S. household spent $525 for food expenditures each month during fiscal year 2008. About 56 percent of all food expenditures paid for food to be consumed at home. Source: U.S. Department of Labor