By Grant Heiman
KU Statehouse News Service
Small town communities along Kansas’ borders lose business when residents cross state lines to save money on groceries.
In a February hearing on House Bill 2261, which would lower the food sales tax by 1 percent, residents of these border communities testified about the struggle to compete against businesses with lower or no food sales tax.
Some residents of Moran, Kansas, make the three-and-a-half-hour round trip to Kansas City, Missouri, to shop for food products. The selection in Kansas City, Missouri, is wider and the food sales tax is 1.225 percent, as opposed to Kansas’ current 6.5 percent tax.
“Sometimes, it is worth it to make the trip when they save a significant amount of money,” Rachel Henderson, general manager of the Marmaton Market in Moran, said. “The overall impact of this habit is huge.”
A 2016 report by the Kansas Public Finance Center at Wichita State University shows that Kansas’ sales tax on food harms economic activity, especially in border counties.
“Our community misses out on any tax revenue, and it hurts business when we have to compete with a lower sales tax,” Henderson said.
According to the report by Wichita State each percent increase in the tax, (assuming surrounding counties have a lower food sales tax), results in $101 drop in food sales per capita.
“This is a tax burden that Kansans shouldn’t have to bear,” Henderson said. “If you aren’t wealthy enough to make regular trips to the city for groceries, you are forced to have a reduced budget for food.”
Of the 105 counties in the state of Kansas, 35 share a border with at least one other state, according to the Wichita State report.
The city of Oberlin, in northwest Kansas, faces the same challenges with losing business to bordering states.
“My grocery store is the only one in the entire county, not only do I enjoy this, but I understand my business also provides a critical service,” Kirk Brown, owner of Reyes Grocery in Oberlin, said in a testimony to the committee.
Halley Roberson, Oberlin’s City Planner, also reflected the same notion.
“This independent grocery store has to try and compete with national chain stores with higher prices for delivery because of lower volume and in addition a 6.5 percent tax his competitors do not have,” Roberson said.
Roberson says a reduction in the food sales tax would help the success of businesses in border towns.
“It is a push-pull situation for sure, but a serious food tax reduction or elimination would at least give border towns like Oberlin some ground to stand on,” Roberson said.
Grant Heiman is a University of Kansas junior from Wichita majoring in journalism.