Columns » Max Brantley

A penny saved

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I do the weekly grocery shopping. Sunday, I spent $109.

With the occasional splurges for holidays and such, I probably spend about $6,500 to $7,500 a year at Kroger.

The tab isn't all for groceries, of course. Light bulbs, dog food, rat poison, batteries, soap and other items run up the bill without incurring a 3 percent charge from the state's remaining sales tax on groceries.

Last Sunday, though, the basket was filled almost entirely with taxable goods. Three months from now, if Gov. Mike Beebe has his way, that same cart would cost about $1 less.

Beebe wants to cut a penny off the sales tax on groceries. He would like to remove the levy entirely, but he says a further penny reduction is all the budget can bear this year, given falling state revenues and the prospect that the economy will get worse before they get better. He opened his governorship with a three-cent reduction in 2007.

Beebe will be on the ballot in 2010. That penny reduction would put another gold star on his political resume. But is it a sound decision from a politician who's been nothing but cautious in his long career? Moreover, does it have the voter resonance that Beebe seems to believe?

Arkansas voters famously rejected abolition of the grocery sales tax in 2002. They are not selfish people. They understood that you can't cut taxes without making sacrifices. The 2002 repeal, which included over-the-counter medicines, would have taken $400 million out of the state cash flow, a painful loss to schools, prisons and health care.

But, Beebe would argue, a one-cent grocery tax cut is something else. Its cost is an estimated $30 million annually. That's chump change in a $4.4 billion annual budget.

It's certainly chump change at the grocery store. I don't think I had a single item in my basket Sunday that I could have purchased with $1, and thus gotten free, with my savings from Beebe's tax reduction. A sack of honey crisp apples (eating healthy, see) was a whopping $9 before the store coupon. White rice costs more than $1 a pound.

The minimal benefit is one reason for wonder about the political dividend of a tiny tax cut.

The primary objection, however, lies in Beebe's plan for meeting expected shortfalls in Medicaid, the federal program for the poor. He'll rely on an accumulated surplus this year. When the surplus money is gone, well, he hopes revenues will have picked up sufficiently to continue services to the needy, many of them elderly. Pushed aside are ideas to expand the health insurance coverage of working poor families with Medicaid.

That $30 million would do a great deal if applied to Medicaid, which provides federal money in a 3-1 match. With $120 million annually, the state could cover year-around nursing home care for some 2,500 elderly. It could provide tens of thousands of people with health care coverage. It's no small thing. And it's a reduction that Mike Beebe would impose forever.

Arkansas's regressive tax on groceries has, odd as it seems, never caused much popular discontent. Many see a perverse fairness in it, as they do with flat income tax schemes. Everybody pays the same (regardless of ability to pay). More perverse still, though, is putting a lifeline for the needy at long-term risk in favor of short-term political gain.

 

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