Sales tax on food-local option.

11LSO-0189.L2

FISCAL NOTE

The fiscal impact, in the form of potential increased sales and used taxes distributed to local governments, is indeterminable. Any potential revenue increases would depend upon the future actions of local government officials and electors.

If you assume that this optional sales and use tax is passed at a rate of 1% in all 23 counties on a county wide basis, it is estimated that this bill would increase sales and use taxes to local governments by roughly $8.9 million in FY 2012.  This calculation is based on the estimated decrease in sales and use tax from the food tax exemption that took place from FY 2006 and FY 2007. FY 2007 was the first year the sales and use tax exemption on food was in place. This estimate is based on sales and use tax data for industry sectors 3118 (bakeries), 4451 (grocery stores), 4471 (convenience stores), 4521 (department stores), and 4529 (general merchandise stores). The total estimated impact of the exemption was divided by the average tax rate to determine the estimate of what a tax of 1% would raise. This estimate includes the 2% administrative fee proposed in the bill for the first year. These estimates are projected forward based on the consumer price index for food and January 2011 CREG estimates.

NOTICE-AGENCY ESTIMATE OF ADMINISTRATIVE IMPACT REQUESTED

This bill has administrative impact that appears to increase (or decrease) duties or responsibilities of one or more state agencies and may impact agency spending or staffing requirements. As introduced, the bill does not modify any state agency budget or current personnel authorizations.

The following state agencies will be asked to provide their estimate of the administrative fiscal impact prior to the first committee meeting held to consider the bill:

Department of Revenue

Prepared by:   Dean Temte, LSO  Phone: 777-7881

(Information provided by Dan Noble, Dept. of Revenue)