What Happens if we eliminate the Grocery Tax?

Both candidates for Virginia Governor favor of removing the grocery tax, which could cost the state up to $500 million. Where will the state recoup the revenue? More than likely they will raise the ‘General Sales Tax’ to make up the difference. Younkin’s overall tax cuts are over a billion, including repealing gas tax increases, as well as increasing tax deductions.

On the surface, this seems like a good thing, putting more money back in the pockets of shoppers.

At a purely local level, once that revenue is lost, how is the state actually going to backfill to help us balance the Northampton County budget? Refreshingly, no one seems more concerned about this than former District 1 Supervisor Granville Hogg.

According to Hogg, Northampton County gets 1% of the Grocery Tax. However, the actual amount of income to the County is very difficult to track.  County gets 1 check that includes the portion of 5.3% Sales Tax, (as of July 6.3%, 1% for schools) and the 1% of the grocery tax. 

But, there is no itemized total, and basically, it comes in a lump sum.

There are approximately 27 entities in Northampton that are collecting a grocery tax.  The Food Lion stores Cape Charles and Exmore are the major players, but there are smaller retailers that offer groceries such as Royal Farms, Shore Stop, Dollar General, and niche markets such as Quail Cove, Gull Hummock, Tim’s, and Drizzles. There are also seasonal operations such as Shockley and Shore Breeze Farms.

The effects of tourism on the grocery tax are certainly a factor. Looking at revenues from the 2nd and 3rd quarters (Oct 1 to March 31) to 1st and 4th quarters (April 1 to Sept 30)  2 and 3 Quarters are basically the locals, 1 and 4 are the combination tourists and locals. 

Certainly, more research is needed to determine the impact of losing this revenue stream.

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Wayne Creed

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