These are units of government that have only the property tax as an alternative way to raise revenue. And, unfortunately for the poor, property taxes have less relationship to one's ability to pay than do sales taxes. At the state level, the food exemption would have broader drawbacks. Our growth in sales tax revenue is very steady stability which is largely due to food, an item of consumption which changes little as the state's economy rises and falls. However, when food is removed from the sales tax base, this reliable tax suddenly becomes erratic.
Politicians respond to erratic tax collections by raising taxes.
Of the 13 states which exempted food since 1971, most raised their sales tax rates within five years. Thus, the average sales tax rate for all states which tax food is 4.78 percent while the average rate for all which exempt food is 5.38 percent. Furthermore, states exempting food have in recent years tried to recover their losses by narrowing the exemption, imposing the tax on various snack foods. Such tax hikes counteract the minor positive effects of a food tax exemption. Profound changes to government spending patterns would also flow from this new food policy.