Oklahoma Policy Institute: Giving Credit Where Credit is Due: Boosting the Grocery Tax Credit Would Provide Targeted Help for Struggling Families
ITEP Work in ActionThe family budgets of low- and moderate-income Oklahomans are under increasing strain from the rapidly rising costs of such essentials as food, fuel and utilities. Food costs rose 5.9 percent over the past year, according to the government’s August inflation data. Price increases have been particularly steep for such dietary staples as dairy (6.4 percent increase over the past year), bread and cereals (11.7 percent), and fruits and vegetables (12.0 percent). With Oklahoma already suffering one of the highest rates of food insecurity and hunger in the nation, rising food costs pose a direct threat to family health and well-being.
This situation has brought renewed attention in Oklahoma to the state’s continued levying of the sales tax on groceries. Of the 45 states that have a general sales tax, Oklahoma is one of just 16 that taxes groceries (see map below). Counties and municipalities also assess sales taxes on groceries.
This brief considers the arguments for and against eliminating the sales tax on groceries. Given the budgetary constraints on state and local government, it recommends an increase in the state grocery tax credit as the most targeted and cost-effective way to assist those with the greatest needs.