Texas Lawmakers Seek to Eliminate Inventory Tax on Groceries to Ease Prices
A new legislative effort in Texas aims to provide price relief for consumers and retailers by eliminating a tax impacting the cost of essential goods. Bipartisan support for Senate Bill 2907 and House Bill 4083 is emerging in the Texas Capitol, spearheaded by Sen. Royce West, D-Dallas, Sen. Paul Bettencourt, R-Houston, and Rep. Angie Chen Button, R-Garland.
These proposed bills seek to exempt specific fresh foods and medications from the state’s ad valorem inventory tax—a levy based on the value of unsold products held by retailers. Supporters, including the Texans for Affordable Food and Medicine coalition, argue that this exemption will lower prices, bolster small grocers’ competitiveness, and enhance access to fresh produce and medications, especially in underserved areas.
Gary Huddleston, a consultant for the Texas Retailers Association, highlighted that Texas is one of the few states imposing an inventory tax, which varies between 0.2% to 0.5%. This tax applies even to essentials like milk, eggs, and some medicines, notably affecting businesses dealing with perishable items.
Current statistics reveal a concerning food insecurity rate in Texas, nearly 17%, compared to the national 13.5%. Huddleston noted that previous attempts to reform the inventory tax have failed, but with the state enjoying a significant budget surplus, the present conditions may favor change.
He reiterated, “Now is the time to reduce the inventory tax,” emphasizing the potential economic benefits of attracting more businesses to Texas through tax reductions. If passed, these tax exemptions could be implemented as early as next year, providing crucial support for grocers facing challenges from new federal tariffs impacting prices on supermarket items.
As the bills head to committee hearings and floor votes, advocates remain optimistic about helping both consumers and retailers navigate an increasingly competitive landscape.
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