The Ohio Supreme Court ruled the state can continue to collect a business tax when it’s applied to grocery store food sales, avoiding what could have been an $188 million annual hole in the state budget.
In a 6-1 decision, the court upheld the collection of the Commercial Activities Tax on food sold by grocery stores and others for offsite consumption. The Ohio Grocers Association had argued that applying the tax to food sales violated the state Constitution, which prohibits sales taxes on the sale of food that’s taken off store premises to eat.
The tax amounts to 26 cents per $100 in sales over $1 million, or a flat rate of $150 for the first $1 million in sales, as long as sales are above $150,000. State tax officials estimate the portion of the tax collected on food receipts would amount to about $188 million a year.
Lawmakers have called the tax as one levied on the privilege of doing business in Ohio, but grocers argued the payment amounted to a sales tax.
The court rejected that argument, noting that state laws are given a strong presumption of constitutionality and that the court was required to uphold the tax if it may “plausibly be determined as permissible.” (Canton Repository)
And one would presume a State Supreme Court Justice would be smart enough to realize that if the grocery stores are taxed on the total amount of food items they sell then this cost will be passed onto consumers on the un-taxed grocery items they purchase - thus creating a sales tax on groceries.
I love how they say you must pay for the "privilege" of doing business in OH.