SB12-094, Def of Food in State Sales Tax Laws

SB12-094

CLARIFICATION OF THE  DEFINITION OF FOOD USED IN STATE SALES TAX LAWS TO ENSURE THE TREATMENT FOR SALES TAX PURPOSES OF A FOOD PRODUCT SOLD FOR DOMESTIC HOME CONSUMPTION BY A GROCERY STORE, SUPERMARKET, OR CONVENIENCE STORE

Sen. Hodge, Rep. Szabo

Staff Name: Stuart Rubinstein

What the Bill Does:  SB 12-094 amends the definition of “food” used in state sales tax statutes.  The clarification is meant to ensure that any food product sold by a grocery store, supermarket or convenience store for the purposes of domestic consumption is taxed uniformly throughout the state.  Currently some items are taxed inconsistently because the store markets the product for sale as a convenience food. 

Colorado Context:  Under current law, only certain prepared foods meant for immediate consumption are taxable by the state.   All other food for home consumption is exempt from state sales tax.  Counties and statutory cities are able to impose sales taxes on food.  As a result, many consumers in Colorado are forced to pay different tax rates for identical items. SB12-094 ensures that all food items are taxed uniformly throughout the state, regardless of where the food was purchased.

National Context:  There are several states which currently have statutes pertaining to the uniformity of levying taxes on food products. Florida, Maryland, Arkansas, New York and Texas have all passed legislation aimed specifically at clarifying which food items are given tax-exempt status.

Bill Provisions:   

• Specifies that food sold “ . . . for domestic home consumption when sold by a grocery store, supermarket, or convenience store does not lose its status as a food sold for domestic home consumption solely because the store sells it or markets it for sale as a convenience food.”

Fiscal Impact: Some loss in revenue at the local level.  By changing the definition of “food,” certain cities may no longer be able to collect sales tax on certain food items.