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Tax overhaul would hurt grocery shoppers

Posted on: 7:10 pm, May 8, 2013, by , updated on: 07:43pm, May 8, 2013

GUILFORD COUNTY, N.C. — Plans to overhaul North Carolina’s tax code has some people wondering if they’ll be able to afford putting food on the table for their families.

Some legislators say groceries are a reliable source of revenue for the state because people have to eat. They are considering a plan that would reduce state income tax and add taxes to services and goods like groceries.

Currently, groceries are taxed locally about 2%, but there are no grocery taxes from the state. The proposal would add anywhere from a 4% to 6% tax on groceries, in addition to the current 2%.

Dr. David Ribar, a Professor of Economics at UNCG, has analyzed the tax proposal. “This is an unbelievably cruel proposal,” he said.

Dr. Ribar believes legislators’ idea of eliminating income taxes to balance higher grocery taxes only shifts the burden to the poor.

“For people in low-income, they don’t have any income tax to cut. So they’ll just see their grocery prices go up. So it’s Robin Hood in reverse for poor people,” he said.

He says the average-income family in America spends just shy of $4,000 a year on groceries. That means an additional grocery tax of 4% to 6% could mean around $200 added to your yearly bill just in grocery taxes.

Not to mention rising cost of gas and groceries, paired with the worry that low-income people might make less-healthy food choices in order to save money, he said.

Jean Hall of Trinity is always looking for a good bargain.

“I do get surprised just about every time I go to the grocery store cuz it’s gone up a few cents here, a few cents there. So, that adds up,” she explained.

She and other grocery shoppers FOX8 interviewed Wednesday were not receptive to the idea of a higher grocery tax.

“The prices are going up and your wages are not. It’s gonna hurt,” said Ellen Mosley, a Greensboro shopper.

“Insurance gaps, taxes. It’s always about money, money this, money that,” said Billy McGee at a High Point grocery store. “Someone on a fixed income like me? I can’t afford to pay all this stuff as it is, let alone put more taxes on groceries.”

McGee wants lawmakers to remember, “People can only do so much. I know they want us to have their backs. But guess what? They need to try to have our backs, too.”

Dr. Ribar added, “There are progressive and fair ways to do this. For instance, many European countries tax food and goods heavily. But those countries and some of our states rebate money to low-income people. We’ve done the opposite. Our legislature has actually cut assistance to the poor.”

Dr. Ribar agreed it’s a good idea to identify loopholes in the tax code and try to eliminate them.

“But we’ve decided groceries and prescription medicines are ‘loopholes?’” he questioned.

The higher rate would also apply to all goods and services currently exempt from taxes. That includes lottery tickets, haircuts, dentist visits, vet bills, housekeeping and lawyers’ fees.