SC grocery tax cut to take effect Oct. 1

From Saturday's Charleston Post and Courier:
Effective October 1, South Carolina sales tax on unprepared foods such as milk, bread, and produce will be cut from 5 cents to 3 cents. Typically, about half of the items in most grocery stores will be eligible for the tax break.

The average family of three spends slightly less than $3,700 a year on food purchases, according to the Census Bureau. If all of that was eligible for the lower tax rate, the family would save $74 annually.

The cut comes as part of a property tax relief bill that will be effective in late 2007. To make up for the difference, statewide sales tax on other purchases will be increased from 5 cents to 6 cents. All groceries will still be subject to county sales taxes which vary across the state. Senior citizens will still receive a one percent sales tax break in addition to the reduced tax on unprepared food.

Supporters speculate that the tax cut is beneficial to consumers, while others say the rise in statewide sales tax will do little to help the buying power of the low-income consumers who will be hit hardest by the rise in statewide sales tax.

When the state sales tax increases in June, it will hit the poor harder than the rich, said Sue Berkowitz, director of the South Carolina Appleseed Legal Justice Center, a Columbia-based advocacy group for the poor. That's because sales taxes are 'regressive,' she said, meaning that on a percentage basis they eat up a larger portion of low-income families' budgets

Grocers do not expect much change in their operations as a result of the tax cut.