Lakewood Drops Food Tax

“Starting next year, Lakewood residents will no longer have to pay a sales tax on groceries,” Tille Fong reports for the May 12 Rocky Mountain News. City Council voted to repeal the tax. This follows a 2003 citizens’ drive to repeal the tax in Littleton.

Fong adds, “The $4 million that the city receives annually from the grocery tax will be offset by the $3 million that will be raised by revoking a 1 percent sales tax waiver granted to Colorado Mills and Wal-Mart.”

I’ve never been a big fan of discriminatory taxes that unfairly advantage new, big businesses. If lower taxes help business, then the sales tax should be reduced for all businesses.

Recently I discussed taxes with a friend, and the conclusion was that it’s bad to tax productivity, because taxing it discourages it. It’s bad to keep taxing the same thing with the same owner over and over, as happens with property and cars. The result is that you never really own your property; you must in effect pay rent to the government to keep possession. It’s bad to tax investment.

Sales tax on consumer goods is least-bad of the options listed, but that creates the problem of taxing the poor for food, housing, medicine, etc. If government exempts certain things, like food, then that applies to expensive steaks and seafood — hardly essentials. Whether government exempts “necessary” items or “poor” people, that generates a bureaucracy to decide what’s exempt and to enforce the rules.

A good rule, though, is that the fewer the types of taxes, the better. The lower those taxes, the better.