OKLAHOMA CITY – As of late last week, Oklahoma lawmakers now have a third option on legislation that would reduce the state’s portion of sales tax on groceries.
Last Thursday House Speaker Charles McCall pulled a legislative hat trick, steering House Bill 3349 out of the House Rules Committee just prior to the deadline. McCall’s bill, which is being marketing as relief from inflation, would suspend the state’s portion of the grocery sales tax – about 4.5 percent – for two years.
A companion piece of legislation, House Bill 3353, would increase the current sales tax credit for low-income Oklahomans up to $180 per year.
In addition to his grocery sales tax proposal, McCall also hinted a larger tax reform effort, saying there was support in the House Republican Caucus for permanently eliminating the grocery sales tax “through a broader tax reform effort.”
"The best way to permanently eliminate the state grocery tax is through comprehensive tax reform that sets a truly conservative state tax code, from top to bottom, for the next generation,” McCall, R-Atoka, said. “Oklahoma could have that discussion over the next two years while still providing temporary relief that meets the immediate, consensus need to make groceries more affordable, especially for low-income Oklahomans, during historic inflation.”
The speaker’s proposals follow two other grocery tax elimination bills working their way through the legislature this year.
Senate Bill 1495 by Senate Pro Tempore Greg Treat, R-Oklahoma City, would eliminate a sales tax on groceries and, at the same time, allow cities and counties to set their own grocery sales tax.
A second proposal, authored by House Minority Leader Emily Virgin, a Norman Democrat, would phase out the state tax on groceries over a three-year period. House Bill 3621 would reduce the state’s part of the grocery sales tax to 3 percent beginning July 1, 2022. The sales tax would drop to 1.5 percent on July 1, 2023, would be completely eliminated by July 1, 2024.
Like Treat’s measure, Virgin’s bill would not affect the local sales tax on groceries.
With legislative leaders in both chambers now behind proposals to reduce or eliminate the sales tax on groceries, the likelihood that Oklahomans will see reduced taxes on groceries is much stronger, Republican political consultant Pat McFerron said.
“When you have the speaker and the pro tempore both behind measures to address grocery sales tax there is a good change something gets to the governor’s desk,” he said. “As long as municipalities are made whole.”
Mike Fina, the executive director of the Oklahoma Municipal League, said any grocery sales tax measure must also address the concerns of the state’s cities and towns, who rely on retail sale tax for their operation.
In an interview with the Ledger in late February, Fina said a complete elimination of the sale tax on groceries “would cause serious problems for the state’s cities and towns because so much of a town’s local revenue comes from a tax on retail businesses.”
“The retail sales tax is vital for communities,” Fina said. “That’s why we have opposed it for many years.” Fina said his organization is working with lawmakers to make sure the language in any grocery sales tax exemption proposal would not harm the state’s cities and towns.
With pressure mounting for some form of grocery sales tax reduction, McFerron said Republican lawmakers have been talking to many who believe in making tax cuts.
“I think you’ll see something happen,” he said, “especially during the time of Biden’s inflation. Cutting sales tax for working Oklahomans is always good policy.”