Shoppers at the Bradlee Center Giant got something unexpected on Friday: lower taxes and campaigning politicians eager to bag groceries. As of July 1, Virginians will pay a lower food tax — just in time for campaign season.
Legislation passed earlier this year replaces provisions enacted in 2004 that would have phased in the rate reduction of the food tax over a three-year period, reducing the tax 3 percent to 1.5 percent ahead of schedule. For Del. Brian Moran (D-46) and David Englin, Democratic candidate for the 45th district, the opportunity was too good to pass up.
"This is great news," said Del. Moran. "Thanks to our leadership passing budget reform last year, we were able to cut taxes for people who need it most, including seniors and working families."
As chairman of the Democratic Caucus in the Republican-controlled House of Delegates, Moran worked with Gov. Mark Warner to pass several budget reforms that made the food tax reduction possible. Moran spent Friday visiting groceries stores in Northern Virginia to campaign with several candidates. The Bradlee Center Giant was the first stop of the day.
"These delegates and candidates want to keep Virginia on the right track we began under Governor Warner — the track of fiscal discipline that will allow us to improve our schools, fix the transportation crisis, and improve public safety," he said.
David Englin, who won the Democratic primary last month, appeared with Moran at the grocery store to tout the food-tax reduction and budget reforms.
"This is a common-sense change, one of the things Democrats have worked toward for many years," said Englin. "It's the kind of goal I look forward to working toward with Brian Moran and the rest of the Democratic caucus in Richmond."
Both Moran and Englin have experience bagging groceries. As a teenager, Moran worked at Roche Brothers Grocery Store. Englin bagged groceries to raise money for the Boy Scouts.
Moran's approach to bagging groceries was serious — a seasoned professional accomplishing a necessary task.
"Heavier items on the bottom," he said while bagging groceries on aisle 5. "The break goes on top."
Englin, who is a retired Air Force officer, approached bagging groceries with a sense of military efficiency.
"Like items go in the same bag," he said. "That way when you unload them, they can go together on the same shelf in your kitchen."
IN THE GENERAL ASSEMBLY, reducing the food tax has been a popular idea for many years. In the early 1970s, Gov. Mills Edwin Godwin Jr. created the tax as a way to create a new source of revenue to fund Virginia's community colleges. Since then, legislators have been eager to kill the unpopular tax.
This year, a perfect storm made that possible. Del. Vincent Callahan (R-34) and Sen. John Chichester (R-28) were chief patrons of the bill that resulted in lower food taxes taking effect last week. Del. Adam Ebbin (D-49) signed on as a co-patron of the House version of the bill, which passed by a vote of 98 to 0. In the Senate, it passed by a vote of 39 to 0.
Legislators created the Food Tax Reduction Program in 1999 to lower the food tax. But plans were stalled because the program could not be implemented until the car tax was lowered and the General Revenue grew by 1 percent — two stipulations attached to the program.
In November 2003, Warner identified reducing the food tax as one part of an overall strategy to reform Virginia's tax code. According to a January 2004 study conducted by the Virginia Department of Planning and Budget, creating the food tax reduction would not hurt state revenues.
"The increase in the sales tax rate on non-food commodities along with the reduction in the rate on food results in a net increase in state revenues," the report concluded. "However, it should be noted that Virginia's sales tax rate is generally lower than other states in the region, even after the proposed rate increase."
The governor's tax-reform proposals prolonged the 2004 session, in which legislators fought over spending and taxes.
"We eventually approved that package, but it took us until May to do it," said Del. Marian Van Landingham (D-45) who is not seeking re-election. "This year, we had the money to fund the food tax reduction ahead of schedule."
THE REDUCED TAX RATE applies to all sales of food for home consumption, using the federal food stamp definition to determine which foods will qualify. Under the General Assembly's definition, food for home consumption includes most grocery items.
Cashiers will not be required to ask customers what their intent is for the food, and packaging will determine how food items will be classified. For example, a salad that is in a closed container that is covered with a lid is packaged for home consumption. If a cold beverage covered with a lid, is packaged for home consumption. If a pre-packaged sandwich is cold, it will qualify for the reduced sales tax rate.
If the pre-packaged sandwich is hot, it will not qualify for the reduced sales tax rate. Most hot foods and beverages — as well as cold foods and beverages served in open containers or food items sold through vending machines — do not apply.
Generally, prepared food sold by restaurants or other retail establishments is not eligible for the reduced rate. Movie theaters and caterers are considered sellers of food for immediate consumption. Therefore, their sales of food will be subject to the full 4.5 percent sales tax rate.
The sales tax regulations require that dealers separately state the total tax on an invoice or receipt. Dealers will not be required to separately state the tax at the differing rates.