Missouri Has Its Own Quirky Tax Rules on Grocery Sales
Photo Credit: Audrey Spalding
In response to my recent post about the different sales tax rates on sliced and unsliced bagels in New York, a commenter correctly points out that sales taxes in Missouri are similarly complicated and unintuitive. Under Section 144.014, RSMo, Missouri assesses a reduced sales tax rate — 1.225 percent instead of 4.225 percent — for certain food products but not others.
Missouri, for example, ruled in June that a retail drug store’s self-serve frozen meals, but not its self-serve coffee, would qualify for the state’s lower sales tax rate on food. Why? Food served hot doesn’t qualify for the lower rate. The store staff brews the coffee, which customers get for themselves in Styrofoam cups. But it is left to the customer to pop the frozen lasagna out of the freezer case and into the store’s microwave.
In an apparent attempt to clarify the differences in taxation on food items in Missouri, the Department of Revenue provides some examples. (I find these examples to be more confusing than clarifying, myself.)
Taxes are difficult to follow when they are different and ambiguous. As I discussed in my previous post on the subject, these taxes are associated with high administrative and compliance costs, and that Missourians would be better off if the sales tax were low and broadly based.