Our Confusing Sales Tax (Minneapolis: co-op, to buy, luxury)

[Beenhere4ever]

On a search for snack bars made with organic ingredients, I found some good brands in Minneapolis. When I checked them out, every one was taxable. Well, I think, I know I want to buy these, but I guess I'll look for a lower tax. So I go to the next closest store outside Minneapolis. Find the display of the same sort of thing, thinking "I'll pay a tax, but at least it won't be so high". Went and checked out. NO TAX! Hard to figure. These aren't exactly candy. In Minneapolis, they get the tax treatment of candy. In St Paul, they ring up as nontaxable food. I'm not really against taxing candy. One thing Americans don't need encouragement on is sugar consumption. But low sugar, whole grain bars just don't seem like "candy" to me. Seems to me if both stores sell x units of the same product, the state will be collecting sales tax from both or neither. If both, then the second store will fork over money they never collected. If neither, then the first store will just have a little extra revenue it collected under the guise of "tax". I'll never know which.

[dravogadro]

I think it depends on what the store reports food as. I do not think a store can charge a tax and then pocket the extra:

http://www.revenue.state.mn.us/busin...ets/FS102A.pdf

[Beenhere4ever]

Originally Posted by dravogadro

I think it depends on what the store reports food as. I do not think a store can charge a tax and then pocket the extra:

http://www.revenue.state.mn.us/busin...ets/FS102A.pdf

Legally, no. Is that the same thing as saying it isn't done? Another thing that amuses me is how one store will tack a sales tax on salads from the salad bar (as is done at Lunds) while another sells it taxfree (as at Rainbow). How can salad bar food vary in status from store to store? Of course, what set this all up was a decision made some time ago to treat some FOOD as luxury food. I understand how candy and pop are considered luxuries. But orange juice? Really? A bottle of orange juice is a "luxury"?

It is just a bit insane. And starting a sales tax (to please rich taxpayers obviously) is a slippery slope. Nothing that happens afterward is likely to be rational.

[flyonpa]

On the Salad Bar @ Supermarket: Here is probably the key difference:

The following items are generally exempt... . However, if any of these items are prepared by the seller, sold with eating utensils provided by the seller, or sold through vending machines, they are taxable.

So, don't put out plastic knives/forks next to the Salad Bar, and it Non/Taxable. Put them over by the deli next to the sandwich making area you are ok, since the sandwich would be taxable.

[rogead]

Originally Posted by Beenhere4ever

On a search for snack bars made with organic ingredients, I found some good brands in Minneapolis. When I checked them out, every one was taxable. Well, I think, I know I want to buy these, but I guess I'll look for a lower tax. So I go to the next closest store outside Minneapolis. Find the display of the same sort of thing, thinking "I'll pay a tax, but at least it won't be so high". Went and checked out. NO TAX! Hard to figure. These aren't exactly candy. In Minneapolis, they get the tax treatment of candy. In St Paul, they ring up as nontaxable food. I'm not really against taxing candy. One thing Americans don't need encouragement on is sugar consumption. But low sugar, whole grain bars just don't seem like "candy" to me. Seems to me if both stores sell x units of the same product, the state will be collecting sales tax from both or neither. If both, then the second store will fork over money they never collected. If neither, then the first store will just have a little extra revenue it collected under the guise of "tax". I'll never know which.

The computer systems in supermarkets are set up to automatically assess sales taxes based upon how the product is categorized. I'm guessing that the first store may have categorized the product as "HBC" (health, beauty, cosmetics) or "candy" (taxable unless it contains flour) which would be taxable. The second store you went to likely had that product defined in a tax-exempt category.

[Beenhere4ever]

Originally Posted by flyonpa

On the Salad Bar @ Supermarket: Here is probably the key difference:

The following items are generally exempt... . However, if any of these items are prepared by the seller, sold with eating utensils provided by the seller, or sold through vending machines, they are taxable.

So, don't put out plastic knives/forks next to the Salad Bar, and it Non/Taxable. Put them over by the deli next to the sandwich making area you are ok, since the sandwich would be taxable.

Doesn't work: Both places put them out. I think it is futile to make sense out of what is being done.

[Beenhere4ever]

Originally Posted by rogead

The computer systems in supermarkets are set up to automatically assess sales taxes based upon how the product is categorized. I'm guessing that the first store may have categorized the product as "HBC" (health, beauty, cosmetics) or "candy" (taxable unless it contains flour) which would be taxable. The second store you went to likely had that product defined in a tax-exempt category.

So the state has made it optional whether they collect tax? Another irrational aspect. By the way, in what parallel universe does food become H&B? It's FOOD! I mean if an orange contains vitamin C, is it now H&B? Look, the whole idea of charging sales tax, something that, for instance, Oregon does NOT do, is a political favor to the highest income residents. That is irrational to me, at the very beginning. So I'm not totally surprised if the actual implementation is irrational, too.

[rogead]

Originally Posted by Beenhere4ever

So the state has made it optional whether they collect tax? Another irrational aspect. By the way, in what parallel universe does food become H&B? It's FOOD! I mean if an orange contains vitamin C, is it now H&B? Look, the whole idea of charging sales tax, something that, for instance, Oregon does NOT do, is a political favor to the highest income residents. That is irrational to me, at the very beginning. So I'm not totally surprised if the actual implementation is irrational, too.

It isn't a matter of merchants having the option to collect or not collect taxes. Rather, it is the fact that different merchants classify different items in different ways. In an large supermarket, there are tens of thousands of SKUs in the database. There isn't an absolute conformity as to how they are entered into that database, nor is there 100% accuracy in placing them into the correct category.

As a category, HBC often includes items that might be classified as health foods. Computer data (which is accessed automatically when an item is scanned) relating to those items can place them into a taxable category.

Yes, sales taxes are by their very nature highly regressive.

[Beenhere4ever]

I know where the tax/no tax decision comes from. But it confounds me that stores aren't required to conform. In that regard, I bought food bars at another St Paul co-op today. No tax. It isn't some isolated store that thinks they are food. It does mean when you walk into a store to buy food, you don't know till checkout if tax is going to be levied. I've even canceled a purchase and given the food back to store staff when I thought the tax imposed was ridiculous. The bottle of orange juice, commercial orange juice, is one case I remember. I was not going to pay tax on commercial orange juice till I learned if every store did it. Same thing with dried banana chips. You ask the store staff and they don't really understand it either. It makes them defensive.

[xandrex]

It is likely they do have to conform, but humans can make mistakes and put things into the wrong categories. Sometimes it just takes time to correct them (I have purchased things at Target that were food but weren't classified as such one time, then they were the next...)

I don't really see how sales taxes are because the rich want them? Sure, they're regressive, but the only people I see advocating any sales tax are the people who want a flat tax (and really, painting a broad brush on what the rich want is as bad as saying all poor people on welfare want cigarettes, booze, and a free flat screen).