Much Ado About Little: The Debate Over the Grocery Tax

Today, my friends (and occasional allies) Fred Nathan of Think New Mexico and Allen Sanchez with the Catholic Church wrote an article in the Albuquerque Journal decrying efforts by the Albuquerque Chamber to convince politicians in Santa Fe to oppose re-instating the tax on groceries that was abolished a few years ago. While the Rio Grande Foundation opposed repeal of the GRT on food when it was actually done because it was bad economic policy, the current situation is a bit different. After all, we’re stuck with the higher GRT burden of 0.5% and we may lose the benefit of tax-free grocery sales.

By the way, lest you think dear reader, that the Rio Grande Foundation was being “anti-poor” in opposing elimination of the GRT on food, I’ll point you to this from the left-wing New Mexico Voices for Children outlining their opposition to the tax switch.

But my real beef here is not with Fred Nathan and Allen Sanchez, rather, it is with the folks at the Albuquerque Chamber who are pushing for restoration of the grocery tax in lieu of other taxes. Now, they are right in that the grocery tax is less economically-harmful than some other tax hike proposals on the table, but that is missing the forest for the trees.

The Albuquerque Chamber (and all other business groups in this state) should remain opposed to ANY TAX HIKE on principle. There is ample room for budget cuts and, as I outlined here, there are ample innovative opportunities for spending reductions. At the very least, The Chamber should push for real budget cuts that are equivalent to any “revenue enhancements.” Unfortunately, they have already given away the store, so now it is all about deciding whose ox is gored.

So, in essence, the battle over the grocery tax is of minor import. Eliminating the tax had negligible impact on the poor and re-instating it is not going to be the end of the world either. What is damaging is business groups happily opening the flood gates to higher taxes.

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