Bill to end Missouri sales tax on groceries draws resistance from local governments

by Rudi Keller, Missouri Independent
February 27, 2025

A little-known quirk of Missouri’s sales tax law means that retailers charge a higher rate for a hot dog purchased off a roller than for a cold sandwich.

Both are meant for immediate consumption. But the cold sandwich can be purchased with Supplemental Nutrition Assistance Program benefits, better known as food stamps, while the hot dog can’t. 

So the tax on the hot dog is 3% more.

On Wednesday, a bill to exempt eligible food from all sales tax drew bipartisan praise for the sponsor and warnings from local officials that it would gut their budgets, forcing cuts in police patrols and other services.

State Sen. Mary Elizabeth Coleman, a Republican from Arnold, has been pushing the bill for several years. During a hearing before the Senate Economic and Workforce Development Committee, Coleman acknowledged that opposition.

“You’re going to hear from a number of people behind me who think this is a terrible idea,” Coleman said. “I hold a lot of minority views, so that doesn’t bother me too much. I’m hopeful I can convince you all that it’s the right thing to do.”

Eliminating the sales tax on food will provide immediate, visible relief for people, said state Sen. Barbara Washington, a Democrat from Kansas City.

“I love this bill, I really appreciate it,” Washington said. “And I want to just say thank you for that. In my district, where I have a lot of low income people, that will really help them with getting their food.”

Missouri is one of 12 states that have a state sales tax on food purchases, and of the states that do not, six allow local sales taxes that cover food sold in grocery stores.

Food accounts for about 20% of the goods subject to sales tax. The remaining state sales tax on food has three components — 1% dedicated to public schools, 0.125% for the Department of Conservation and 0.1% for state parks and soil conservation.

In some communities, where grocery stores are the major retailer, the share of sales tax revenue from food purchases can be even higher.

Natalie McNish, mayor of Marshfield in southwest Missouri, said her city of 8,000 people operates on a budget of $6.8 million. Food sales alone make up 28% of that revenue, she said.

“We do not agree that this is the best course of action, and we do believe that this would very negatively impact our operations,” McNish said. “We also are looking forward to being partners with the team and helping forge something that is better for everybody.”

Coleman’s bill would eliminate the state portion of the sales tax immediately and phase out local taxes over four years.

“If our local communities need to take a vote to the people to ask if they’d like to have an offset by adjusting the other sales tax rates,” Coleman said. “This would give them time to do so.”

According to the fiscal note prepared for Coleman’s bill, food sales in fiscal 2024 totaled $18.4 billion. Eliminating the tax would reduce funding for schools by $184 million, or about $250 per student in every district in the state.

City governments across the state would receive $417 million less in revenue, county receipts would be cut by $308 million and other political subdivisions, such as ambulance, fire and emergency services, would be cut by almost $77 million.

The revenue from food sales tax helps cities pay salaries for police and meet debt payments, said David Dimmit, mayor of Brentwood in St. Louis County.

“Every citizen is feeling the effect of inflation and the pain of purchasing goods and services at this time,” Dimmit said ”And your city governments are no different, but cutting the sales taxes on groceries would be the wrong way to address the issue. Instead, it would only lead to unacceptable and potentially dangerous cuts to services expected and deserved by local residents.”

State Sen. David Gregory, a Chesterfield Republican, said he wasn’t worried that local governments would have to pare back spending.

“I know with 100% certainty that there are ways to save money within government operations,” Gregory said.

A 1997 law exempted products that can be purchased with SNAP benefits from the state general revenue sales tax. But the law left in place the remainder of the state sales tax — 1.225% — and all local sales taxes — as much as 8% in some communities.

The 1997 law was passed at a time when the state treasury was collecting more than allowed under the tax limitation provisions of the state Constitution known as the Hancock Amendment. The exemption was not extended to other taxes because of the impact on schools and local budgets and the possibility the courts could order the state to replace the lost revenue.

Coleman’s bill is being considered in a year when lawmakers are also looking at ways to cut or eliminate the state income tax and replace the revenue with an expanded sales tax. As much as she likes the bill, Washington said during the hearing, she is worried about the state maintaining its revenue base.

“If we do this, and we eliminate the income tax, where will we fund the state?” Washington asked.

If the income tax plans move forward, Coleman replied, it will mean a close examination of every one of the dozens of sales tax exemptions.

“They’re going to have to be addressed as part of a cohesive plan,” Coleman said.

The food exemption makes sense under any system, she said.

“If we don’t get a grand solution on revamping how our tax base is working,” Coleman said, “I still think that this is the right solution to create this carve-out because our poorest citizens are having to pay regressive taxes.”

Missouri Independent is part of States Newsroom, a nonprofit news network supported by grants and a coalition of donors as a 501c(3) public charity. Missouri Independent maintains editorial independence. Contact Editor Jason Hancock for questions: info@missouriindependent.com.

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