Did you have chips with your July 4th hot dog? If you live in one of 17 states, you likely paid tax on that snack.
According to the Fedreation of Tax
Adminstrators, sales tax at either the state
and/or at a more local level is collected on food products sold in Alabama, Arkansas, Georgia, Hawaii. Idaho, Illinois, Kansas, Louisiana,
Mississippi, Missouri, North Carolina, Oklahoma, South Dakota,
Tennessee, Utah, Virginia and West Virginia.
One of the more interesting things about these taxes is just what constitutes food. Some folks say anything edible is food. But for tax purposes, there usually are distinctions.
Beverages, while sold at grocery stores, tend to be taxed while other items escape the levy. Snacks and candy are often taxed, while fruits and vegetables aren’t.
Yes, it’s another instance of trying to use tax laws to shape behavior, which gets us into the argument over whether that’s appropriate tax policy. But that’s a debate for another time.
Good food, bad food, taxed food: I used to work for Nestlé, so I’m a bit biased. As the world’s largest food company — yes, its brands go beyond yummy chocolate candy — Nestlé joined with other food manufacturers to fight all forms of food taxes.
I’ve been gone from that legislative battle for while, but it still rages on, as evidenced by this Grocery Manufacturers Association’s discussion of food taxes
And I still agree with GMA et al that selective food taxation is arbitrary, discriminatory, and regressive.
Taxing one item within a category and excluding others is confusing. Worse, food taxes, like sales taxes in general, disproportionately
affect households with less money to spend on everything, including food products.
Food is a basic essential. It just doesn’t seem right to tax something that we need to live.
Yes, we all should eat healthier comestibles. Yes, obesity is a health issue that costs us all when weight contributes to illnesses that subsequently lower worker productivity and/or increase health care costs. And yes, taxes dedicated to programs to treat overweight and other other health-related problems do help mitigate those costs.
But I tend to the libertarian side when it comes to making decisions about what to do in my personal life and to my own body. And as someone who enjoys eating, way too much too much of the time, I can promise you that taxes aren’t going to make me change my diet.
Plus, the whole idea of parsing just what is and isn’t food is ridiculous … unless you’re in a British courtroom.
Pringles: Potato or not?
Justice Nicholas Warren
overruled a VAT Tribunal decision that Pringles should be
subject to the 17.5 percent tax because it met the definition of
”potato crisps, potato sticks, potato puffs and similar products made
from the potato, or from potato flour, or from potato starch.”
In support of the case that Pringles should not be taxed as food, manufacturer Procter & Gamble UK argued, in part:
- Regular
Pringles are not similar to potato crisps [aka chips here in the U.S.] on the ground of regularity
of shape, having a shape not found in nature, uniform coloring,
texture, taste particularly "mouth melt". Crisps do not contain
non-potato flours as does Pringles. Crisps are not normally packaged in
tubes. - The
manufacturing process is different from potato crisps and more like
that of a cake or biscuit, being made from a dough, then cut into a
standard shape, and then cooked separately. - Customers do not see
Regular Pringles as potato crisps. The ingredients of products in the
modern snack market are largely irrelevant to purchasers, as is
demonstrated by the labeling requirements. - No one ingredient of Regular Pringles is over 50 per cent.
That last point had an impact on the judge, who noted that Pringles were only 42 percent potato, and thus exempt from the tax.
Almost as intriguing to me is the fact that P&G argued so emphatically that its grocery product isn’t food. As one who doesn’t like Pringles at all, I definitely agree. The taste to me is akin to the cardboard in which the snacks are packaged.
Give me my good, greasy, salty, irregularly shaped, unhealthy Lay’s any day of the week, tax policy be damned!
You can read the ruling here, and additional media coverage at Bloomberg, National Post, Associated Press, Scotsman, Forbes and London Telegraph.
