BOISE -- House Speaker Scott Bedke is planning to propose legislation that would eliminate the grocery tax credit and lower state income tax.
The grocery tax credit was created in the 2008 session and was meant to pay Idaho residents back for the money they spend on taxes on their groceries.
"For the average citizen in Idaho that's about $80 per citizen, a little more if you make less or if you're a senior," said Bedke. "And tied up in this whole policy we have over $130 million of obligation to this program."
Bedke, a Republican from Oakley, wants to take tax policy dollars tied to the grocery tax program and use that to lower state income tax, so he is working on legislation to eliminate the grocery tax for everyone above a certain income level.
"This proposal would leave enough money in the grocery tax credit policy to pay those who really need it, and everything else would be used to go buy down the rates in the income tax," said Bedke.
His goal is that residents would pay lower income taxes and that would off-set the $80 of grocery tax credit they would no longer get. Bedke said lowering Idaho's income tax rate would make the state more competitive with our neighboring states when businesses are looking to move to the region.
"I don't think that we've ever closed one deal on the strength of our grocery tax credit system, but we've lost, arguably, deals because our income tax was a little higher than the neighboring states," said Bedke.
Data from taxpolicycenter.org shows the only state in our area with higher state income taxes is Oregon, which does not have sales tax. Bedke would like to take Idaho's income tax rate from 7.4 percent to 6.9 percent.
"Then we're that much more attractive and that much more competitive when it comes to siting new businesses here," Bedke said. "Our citizens are wondering what we're doing to create jobs and to stimulate the economy, and arguably, having all of our policy tied up in grocery tax credit is doing neither."
Bedke said a lot of legislators are talking about the idea since he first brought up the idea and hopes to have bill drafted by the end of the week.
Gov. Butch Otter said he would consider a proposal to shift money from the grocery tax credit to individual and corporate income tax cuts.