Sales Taxes on Food

Abstract

The general sales tax in effect last year in 45 States and the District of Columbia' was the most important source of revenue for about one-fourth of these jurisdictions. In 1977, about I of every 6 tax dollars collected by States and localities came from the general sales tax, slightly more than from income taxes but less than from property taxes. Twenty-five of the States with a sales tax plus the District of Columbia exempt food for home consumption (food at home), and six States, including two with food exemptions, provide for a credit against income taxes. The sales tax is a popular source of revenue largely because it can be efficiently collected and is not easily avoided. Some critics argue that while it is an efficient revenue generator, the sales tax-and especially the food sales tax-is inequitable because higher income individuals can more easily page than those with lower incomes.