Senate, House pass measure to eliminate sales tax on food, essential hygiene products

BY QUINN HUMPHREY
(CNS) – Virginia legislators are close to passing legislation that would remove Virginia’s consumer use sales tax on food and essential hygiene products. 

HB90, proposed by Del. Joseph McNamara, R-Roanoke, and co-patroned by Sen. David Suetterlein, R-Salem, passed the House on Feb. 15. It was conformed into nearly identical Senate bill SB451, proposed by Sen. Jennifer Boysko, D-Herndon, and Sen. Jennifer McClellen, D-Richmond, on March 1 and passed the Senate. 

McNamara called for bipartisan support and emphasized the benefits of the bill when presenting it to the House on Feb. 14.The House bill passed 80-20 on Feb. 15.and the Senate bill passed 

“House Bill 90 is a 100% elimination of the grocery tax and a 100% reimbursement to the localities,” McNamara said. “I look forward to working with both sides of the aisle as Virginia becomes the 38th state to not tax groceries.”

McNamara argued for the bill by explaining the impact the grocery tax has on poor Virginians. 

“This regressive tax hits the poor more than any other tax that we have in our collection,” McNamara said. “I look forward to putting $75 per individual and $300 for a family of four back into their pockets and make groceries more affordable.” 

Virginia is one of 13 states that tax groceries. The rate is2.5% on all food purchased for home consumption. Most staple grocery items fall under this category, however, exceptions include alcoholic beverages, tobacco products and prepackaged hot food meals. In January. 2020, Virginia’s sales tax of 5.3% on essential hygiene products, which include diapers, disposable bedsheets and feminine hygiene products, was reduced to the same 2.5% rate.  

Of the 2.5% tax, one percent goes to local cities and counties, while the other 1.5% goes toward stateeducation and transportation funding.

The tax brings in roughly $600 million in state revenue annually, according to Stephen Haner of the Thomas Jefferson Institute, a nonprofit research and education organization in Virginia. 

At the end of 2021, former Gov. Ralph Northam announced that Virginia had a state budget surplus of $2.6 billion. State officials attributed the surplus to cautious spending strategies during the pandemic and federal stimulus programs.

The Commonwealth Transportation Fund, which allocates funding to different transportation sectors and allows for their continued upkeep, had a budget surplus of $370 million in 2021. McNamara specifically highlighted this fund as a solution to replacing the deficit that eliminating the grocery tax would create.

“Many of those funds are based on the percentage of the cost of gas,” McNamara said. “Since gas is so expensive, those funds are pretty rich right now.” 

Del. Vivian Watts, D-Annandale, who voted against the bill, expressed concern over the lack of provisions for school funding. Watts, who has sponsored a variety of tax reform billsaddressed the House and urgedmembers to reconsider the long-term effects of the bill. 

“We are about to make a major change in our school funding by a few words on the page,” Watts said, referring to the language used in the bill.

Watts noted that the budget surpluses Republicans have referenced are based on pandemic statistics, which are not indicative of long-term state financial trends. Watts’ said herprimary concern with the legislation is that within the proposed reallocation of state funding to localities, there is no defined provision regarding year-to-year school funding.

“No longer will there be anything turned back on the basis of school-aged population,” Watts said. “It will all go back based on collection. The rich get richer.”

For example, Watts said, retail cores – areas with prominent businesses such as Short Pump – and low school-based populations will reap the benefits of the tax elimination, whereas areas with less businesses and higher school-based need would receive less. 

“I urge you to look at the bright words on the page before you vote on this bill,” Watts said. 

SB451, the bill patroned by Boysko, has the same effect of HB90 in removing the reduced sales tax and also includes provisions specifically for school funding. 

SB451 now heads to Gov. Glenn Youngkin. 

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