Kansas Governor continues push for elimination of state sales tax on groceries

TOPEKA – Governor Laura Kelly announced that March’s total tax receipts continued their positive pattern. Total tax receipts were $679.6 million, which is $80.2 million, or 13.4%, more than the November 2021 revised estimate.

“Due to the state’s sales tax on groceries and pandemic-induced inflation, Kansans continue to pay some of the highest grocery prices in the nation,” Governor Laura Kelly said. “These collection numbers demonstrate the ability to ‘Axe the Food Tax,’ eliminating the state’s sales tax on groceries on July 1, which provides immediate relief to all Kansans.”

The four major tax sources continue to perform well nine months into the 2022 fiscal year. Individual income tax collections were $298.2 million. That is $38.2 million, or 14.7%, over the estimate. Corporate income tax collections were $27.6 million, which exceeded the estimate by $9.6 million, or 53.6%.

Retail sales tax collections were $217.5 million. That is $17.5 million, or 8.8%, over the estimate and 12.0% over March 2021, reflecting better than expected growth. Compensating use tax collections were $62.8 million, which is $0.8 million over the estimate, and $20.2 million, or 47.5%, greater than March 2021.

The South Dakota v. Wayfair decision and the 2021 marketplace facilitators legislation have had significant impact on compensating use tax receipts. In March 2018, three months before Wayfair, collections totaled $29.5 million; collections from that tax source more than doubled in March 2022 to $62.8 million.

“The compensating use tax has shown itself to be a reliable revenue source and will surpass corporate income tax as the third major Kansas tax source as it is on a trajectory to meet the $760.0 million estimate for such tax for Fiscal Year 2022,” Secretary of Revenue Mark Burghart said.

The Consensus Revenue Estimating Group, comprised of the Department of Revenue, Division of Budget, Legislative Research Department, and economists from the University of Kansas, Kansas State University, and Wichita State University, will meet on April 20th. The group will review the fall estimate and make any revisions it may consider necessary.

The March tax collections spreadsheet can be found here.