Why did the food tax go up in 2004?
A large group of states have agreed to a set of uniform sales tax rules ("streamlining" agreement) in order to make possible the collection of tax on "remote sales", such as the taxes that people are now avoiding by making purchases over the internet.
Do the new streamlining rules require that we tax food?
Exempting groceries from sales tax is allowed in the streamlining agreement. The majority of states involved in the streamlining agreement do not tax food. The streamlining rules say a state may have a different salex tax rate on food, different from the general sales tax rate. Thus it is possible to phase out the food tax, as some states are doing.
Where does the money from the food tax go?
All of the state's food tax goes into the general fund of the state.
All of the city's food tax goes into the general fund of the city.
What is meant by "food"?
"Food" means purchased at local grocery stores, i.e., food for home consumption, not restaurant meals.
Now there are two available definitions. (1) The definition currently in use is the same as is used by the food stamp program. (2) A newer definition has been written so as to be ready for use when the collction of sales tax on sales made over the internet begins. In ending the food tax, the state could take the option, within the Streamlining guidelines, to keep the tax on pop and candy.
Restaurant meals, or a shake at a fast food drive-in, are not included in the definition of food. Ending the food tax would not affect the tax on them.