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Minutes for HB2091 - Committee on Taxation
Short Title
Providing a refundable income tax credit for certain purchases of food and discontinuing the nonrefundable food sales tax credit.
Minutes Content for Thu, Jan 28, 2021
Chairperson Smith opened the hearing on HB2091.
Adam Siebers provided an overview for HB2091 that creates a refundable food sales tax credit and discontinues the existing nonrefundable food sales tax credit. (Attachment 1)
In response to a question, Mr. Siebers stated the Refundable tax credit is if a person does not have a tax liability, the State will issue a check for the amount above the tax liability. Nonrefundable means there is not a refund in excess of the tax liability and a taxpayer may only have up to that amount to use the credit. If the credit is for $125 for a nonrefundable credit, you would have to have a tax liability of at least $125. for the credit to have full affect on your tax liability.
In response to a question, Mr. Siebers noted the starting point for the credit would be what their Federal AGI is without any contemplation of subsequent income tax subtraction or addition modifications. He stated Revenue or Research may be able to provide more guidance such as a case study.
Eddie Penner, Research Analyst stated he would put together a couple of hypothetical taxpayer scenarios for Committee members to review.
Kathleen Smith, Kansas Department of Revenue stated HB2091 would decrease the State General Fund revenues by $53.9 million in FY2022, $55.5 million in FY2023, and $57.2 million in FY2024 and takes into account the nonrefundable credit on the books at this time. The Department of Revenue is estimating more than 540,000 individuals will be able to qualify for this refundable credit.
Mr. Penner provided the numbers on what the food sales tax is in Kansas statewide The exemption of food from sales tax would result in a reduction of the State General Fund receipts of $150.0 million for FY2022, $363.75 million for FY2023, and $367.3 million for FY2024. He noted this will also have a negative impact on the State Highway fund of $28.9 million for FY2022, $70.8 million in FY2023, and $70.78 million in FY2024. In addition to the numbers there would be an impact on the local sales tax collections.
In response to a question, Mr. Penner will provide information on the number of sales tax dollars for grocery coupons.
Proponents:
Emily Fetsch, Kansas Action for Children testified via Webex as a proponent for HB2091 stating the food sales tax rate is too high and the second highest nationwide. The high food sales tax disproportionately hurts the budget of low-income Kansans. KAC supports HB2091 because the bill is a targeted policy solution to help Kansas families who need it the most to put food on the table. When the credit was refundable, filers with credit amounts that exceeded their tax liability were able to receive the difference. Nonrefundable credits are less helpful for low income earners who do not have a high tax liability to benefit from the credit and are the ones who need it the most. Kansas Action for Children urges the Committee to consider reinstating the refundable credit that would alleviate the impact of the Kansas high food sales tax for low income Kansans (Attachment 2)
Sister Therese Bangert, Sisters of Charity of Leavenworth testified as a proponent for HB2091 noting the bill has put forth a refundable credit to acknowledge that people of low income pay a greater percentage of their incomes in taxes. (Attachment 3)
Rabbi Moti Rieber, Kansas Interfaith Action testified as a proponent for HB2091 noting it is a key public policy concern of the faith community regarding poverty and hunger. Low income people pay significantly higher percentages of their income in taxes than higher-income people. He noted in Kansas, before the pandemic, 368,770 people were struggling with hunger and 129,780 of them were children. He stated the faith community urges the Committee to support HB2091. (Attachment 4)
Haley Kottler, Kansas Appleseed Center for Law & Justice testified as a proponent for HB2091 stating the refundable food sales tax credit proposed in this bill is a targeted measure that will help Kansans with low-incomes purchase the food they need. Addressing hunger in Kansas is more essential now than ever as food insecurity has grown in the wake of COVID-19. Ms. Kottler stated Kansas Appleseed urges the Committee to support HB2091. (Attachment 5)
In response to a question, Ms. Kottler stated the defined answer for food insecurity is 1 in 5 Kansas children were facing food insecurity before the pandemic and as of 2020, 1 in 4 Kansas children are facing food insecurity.
Haley Roberson, City Administrator for a rural community in northwestern Kansas testified as a proponent for HB2091 stating they have one grocery store in the entire county and the owner passed away which leaves the community in a difficult situation. With the high food tax, it makes the business less viable for investors. Her concern with HB2091 comes from the community she serves which is a high elderly population and fifty percent at a poverty level. She stated a reduction on food tax at the cash register would help instead of waiting until they file their taxes at the end of the year. (Attachment 6)
Written testimony was submitted by the following:
Valerie Nicholson-Watson, Harvesters Community Food Network (Attachment 7)
Julie Brewer, United Community Services of Johnson County (Attachment 8)
Dennis Kriesel, Kansas Association of Local Health Departments (Attachment 9)
Aften Gardner, ADM, Wallace County Health Department (Attachment 10)
Zack Pistora, Kansas Sierra Club (Attachment 11)
Beth Low-Smith, KC Healthy Kids (Attachment 12)
Chairperson Smith closed the hearing for HB2091.
Meeting adjourned at 4:25 pm.
