Sales Tax Slice: It’s the End of the World As We Know It … And I Want to Know What This Means for Sales Tax


 

Apocalypse

If your office is anything like mine, one topic has dominated all of the water cooler talk over the last couple of weeks: the recent New York Magazine article discussing the imminent climate change “doomsday.”[1]

Additionally, if your office is full of tax policy wonks, like at Bloomberg BNA, your discussion quickly turned from the terrifying to the nitty gritty. We stopped speculating about the endless potential disaster scenarios and starting wondering: what are the tax implications of all of this doom and gloom?

If you have decided to start making purchases to prepare for the apocalypse, you may be pleasantly surprised when it comes to your sales tax bill. Items listed on most survival checklists, like canned or freeze dried foods, are exempt from sales tax in most states. In a few of the states that would impose tax on your bulk purchase of beef jerky and dried beans, you may be charged a reduced tax rate on such items. Illinois, Arkansas, Virginia, Utah, and Tennessee all have a special, lower tax rate for groceries. Unfortunately for survivalists, some of the best states to make it through the end of days are going to charge sales tax when you buy your emergency rations. Oklahoma is apparently an ideal place for waiting out a global pandemic, but taxes the sale, use, storage, or consumption of any type of food within the state.

Bottled water may be an even more essential supply than preserved food when temperatures begin to skyrocket, but in general, states are less generous about giving sales tax exemptions for bottled water than they are for food. Louisiana, for example, excludes bottled water from its definition of tax-exempt food, and imposes both state and local sales tax on all sales of this doomsday necessity. Maine, Maryland, and New York follow suit and tax all sales of bottled water, despite offering exemptions for other common grocery purchases.

Sales tax holidays may provide an excellent opportunity to stock your bunker. As I have discussed previously, some states offer tax holidays for emergency preparedness or severe weather supplies. Although generally targeted at supplies for more mundane events, covered items such as first aid kits and non-electric can openers could certainly come in handy when the oceans turn to poison.

As for me, I’m probably just going to stock up on soft drinks so I can drink hot Dr. Pepper, “Blast from the Past”-style, if the time comes that I have to hunker down in my basement. Unfortunately, those cases of soda will be taxed at a rate of 6 percent in Washington, D.C., where I reside. But if all of this becomes necessary, that will probably be the least of my worries.

Continue the discussion on Bloomberg BNA’s State Tax Group on LinkedIn: Should states offer more tax incentives for emergency supplies, based on evidence that natural disasters and similar events may start becoming more common due to climate change?

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[1] If this topic is of interest, you might enjoy the even longer, scarier version, found here.