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Minutes for HB2720 - Committee on Taxation

Short Title

Providing a refundable income tax credit for certain purchases of food and discontinuing the nonrefundable food sales tax credit.

Minutes Content for Mon, Mar 9, 2020

Chairman Johnson opened the hearing and recognized Adam Siebers, Assistant Revisor, who provided an overview on HB2720 .  He stated the bill creates a refundable food sales tax credit and discontinues the existing nonrefundable food sales tax credit (Attachment 1).

Mark Burghart, Secretary, Kansas Department of Revenue provided an overview of the History of Food Tax prepared by Kathleen Smith, Department of Revenue, that was presented to the Governor's Council on Tax Reform in 2019.  He noted the memorandum identifies what took place on specific years identified.  Over the years the income thresholds were raised or the credit amount was increased by ten or eleven different amendments. The refundable food sales tax credit has been on the books since 1978 (Attachment 2).  Secretary Burghart answered questions from Committee members.

Kathleen Smith provided an overview on the fiscal note for HB2720 stating the Department of Revenue estimated it would decrease the State General Fun $53.2 million in FY2021, $54.8 million in FY2022, and $56.5 million in FY2023.  The bill would allow 540,000 taxpayers to apply for the refundable food sales tax credit. 

In response to a question, Kathleen Smith stated with the number of taxpayers now able to qualify this will increase the fiscal note as well as the amount.  For married filing jointly,  there will be approximately 98.000 to 100,000  taxpayers who will be able to qualify and will receive $240. versus the $125. they previously received.  She noted the fiscal note for HB2720 is the updated revision. 

Proponents:

Mark Burghart appeared on behalf of the Department of Revenue, as Secretary and the Governor's Council on Tax Reform for HB2720  stating the bill is a recommendation of the Council that would create a refundable food income tax credit starting in tax year 2020.  He noted during the hearings on the proposal a question was raised to do a general rate decrease for food sales tax and the Council agreed that it would be more meaningful to have more of a targeted relief under HB2720 instead of a general rate decrease.  Secretary Burghart provided a summary of HB2720  (Attachment 3). 

In response to questions, Mr. Burghart stated individual income tax returns are approximately 1.3 million.  To eliminate the entire sales tax on food would be in the range of $450.0 million or approximately $60.0 million for each penny. 

Sister Therese Bangert, Sisters of Charity of Leavenworth, testified for HB2720 stating the bill provides a refundable food sales tax credit that targets families and individuals who already pay a greater percentage of their income for taxes. Targeting is an important attempt to make a fairer "tax field".  She noted HB2720 will impact those who do not live in abundance (Attachment 4).

John Wilson, Kansas Action for Children, testified for HB2720 stating they support the bill  because it is a targeted policy solution to help Kansas families to place food on the table.  He spoke about tax policies enacted in 2012 that hindered the financial well being of working families.  In 2013, the food sales tax credit was made nonrefundable along with changes in eligibility.  Those changes decreased the number of filers using the credit.  Nonrefundable credits are less helpful for low income earners who do not have high levels of tax liability to benefit from the credit (Attachment 5).

Emily Brown, Food Equality Initiative, Inc., testified for HB2720 stating having access to quality healthy food is the foundation of good health (Attachment 6).

Vashti Winterburg, Lawrence, Kansas, testified for HB2720 stating she is in favor of restoring the food sale tax refund to low income Kansans (Attachment 7).

Written testimony was presented by the following:

Mark Desetti, Kansas National Education Association, (Attachment 8)

Valerie Nicholson-Watson, Harvesters Community Food Network, (Attachment 9)

Erin Laurie, Franklin County Health Department, (Attachment 10)

Lindsay Payer, Coffey County Health Department, (Attachment 11)

Tammy Von Busch, Geary County Health Department, (Attachment 12)

Shalei Shea, McPherson County Health Department, (Attachment 13)

Aften Gardner, Wallace County Health Department, (Attachment 14)

Dennis Kriesel, Kansas Association of Local Health Departments, (Attachment 15)

Beth Low-Smith, KC Healthy Kids, (Attachment 16)

Neutral:

Written testimony was presented by Michael Austin, Kansas Policy Institute, (Attachment 17)

Chairperson Johnson thanked the conferees for their testimony and closed the hearing for HB2720.