Eliminating the grocery tax would leave some local governments looking to replace that revenue
On the campaign trail, the Republican candidate for governor said he wanted to eliminate the sales tax on groceries. Now that Glenn Youngkin's about to take office, lawmakers are about to start considering how to make that happen.
Eliminating the grocery tax used to be a liberal idea, something that progressives argued for because it would help mainly low-income people. Then Republican candidate for governor Glenn Youngkin campaigned on it. Now lawmakers from both parties appear poised to make it happen. Commonwealth Institute senior policy analyst Chris Wodicka:
"By eliminating this revenue source without adequately replacing it," Wodicka says. "A lot of local governments may be in a situation where they would need to raise other taxes in response or cut services to make up the difference."
Eliminating the sales tax on groceries would be a big hit to cities and counties across Virginia. 20% of the revenues go to education, and another 20% goes directly to local governments. Center on Budget and Policy Priorities senior analyst Eric Figueroa:
"What I would caution is to be very deliberate about making up the revenue in progressive ways," Figueroa explains. "And that would end up being maybe higher income tax on high earners or sort of different types of property tax to make up that difference."
Several options are on the table for making up that difference, including broadening the sales tax for digital products, allowing more local taxing authority and reducing unfunded pension liability.