Eliminating Grocery Tax: Fairy Tale or Reality?

Wednesday, February 4th 2009, 10:01 am
By: News 9

Associated Press

OKLAHOMA CITY -- A Senate committee has approved a bill to eliminate the 4.5 percent state sales tax on groceries, despite one senator's argument that lawmakers are fostering a fairy tale.

Several legislators have introduced similar measures. Sen. Mike Mazzei, R-Tulsa, is sponsor of the bill that was passed Tuesday by the Senate Finance Committee, which Mazzei chairs.

Mazzei also won approval of his bill to remove a requirement that kept a previously approved income tax cut from taking effect.

The Legislature has voted to drop the maximum income tax rate from 5.5 percent to 5.25 percent, but that is contingent on a revenue growth rate of 4 percent, which did not happen this year.

Mazzei's plan removes the requirement and allows the lower rate to take place in the 2010 tax year. It would be a $44 million annual tax cut.

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Removing the sales tax on groceries would be a $245 million tax reduction when fully implemented in five years, according to the Oklahoma Tax Commission.

Sen. Johnnie Crutchfield, D-Ardmore, said eliminating the grocery tax would help more people than other tax cuts passed in recent years.

Crutchfield said it would be "a great tax cut," but it cannot be done in a year when there is a $600 million state budget shortfall.

He asked his fellow senators: "Why are you putting a fairy tale out there for the public?"

The term-limited Crutchfield cast the only "no" vote.

Sen. Jay Paul Gumm, D-Durant, has been pushing for eliminating the sales tax on groceries. He expressed optimism that lawmakers could at least make a start toward doing away with the tax.

"It takes time sometimes for a very good bill to become law," Gumm said. "We need to move the ball down the hill a little bit."

The committee also approved a bill to extend a tax credit on horizontal drilling for natural gas.

All the measures passed by the panel are expected to go to a joint House-Senate conference committee, where final decisions will be made later in the session.