Could a 1995 Idaho ballot initiative successfully exempt food, water, and clothing from Idaho sales tax by amending Idaho Code § 63-3619?

Plain-English summary

Mary J. Charbonough filed an initiative on September 13, 1995 to exempt the purchase of water, food, and clothing from Idaho sales tax. The intent statement called these "necessities of life, for everyone."

Deputy AG Brian G. Nicholas, writing for AG Alan G. Lance, identified four practical drafting problems with the initiative as written.

First and most important: the initiative amends Idaho Code § 63-3619 (the sales tax imposition statute) but leaves Idaho Code § 63-3621 (the use tax statute) untouched. Idaho's use tax is the complement to its sales tax: if a sale is not subject to Idaho sales tax (typically because it is from an out-of-state seller and the goods are shipped to Idaho), the buyer owes a 5% use tax. Use-tax exemptions are listed in § 63-3622, not § 63-3619. So a person who buys clothing or food from an out-of-state retailer would still owe the 5% use tax, defeating the initiative's apparent purpose. The cleaner approach would be to add a new exemption section under § 63-3622 (perhaps a § 63-3622LL) that operates against both sales and use tax simultaneously.

Second, the initiative does not define "food," "water," or "clothing." Most states that exempt food define it (often by reference to the federal food-stamp definition), distinguishing groceries from restaurant meals and addressing beverages like soda, juice, milk, coffee, and tea. The undefined "clothing" raises questions about specialized sporting equipment (helmets, knee pads, lifejackets) and luxury items (designer dresses, mink coats). "Water" is partly already exempt under § 63-3622F when delivered through pipes, wires, mains, or similar systems; the initiative might be intended to capture bottled water and other water-based beverages, but the absence of a definition leaves that ambiguous.

Third, Idaho Code § 63-3024A provides a $15 income-tax credit per personal exemption that has long been understood as an offset for sales taxes paid on food. If the initiative passes a sales-tax exemption for food, the income-tax credit may duplicate the relief; the petitioners should consider expressly repealing § 63-3024A if they want to avoid that.

Fourth, the initiative has no effective date. Under Idaho Code § 34-1813, the law would take effect when the Governor proclaims the initiative as approved by a majority of voters, with no transition period. Retailers need time to reprogram registers and the Tax Commission needs time to issue rules and forms. Effective dates that fall in the middle of a reporting period complicate sales tax returns. The petitioners should propose an effective date at the beginning of a calendar quarter.

Currency note

This opinion was issued in 1995. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Common questions

Why is the use-tax issue so important?

Because the use tax is what catches purchases from out-of-state sellers, mail-order companies, and (today) online retailers. If a state has a sales-tax exemption that does not parallel a use-tax exemption, then in-state retailers do not collect tax on the exempt items but out-of-state sellers (or the buyer directly) still owe tax. This both undercuts the exemption's purpose and creates a Commerce Clause headache: a parallel exemption from use tax avoids both problems.

Why is exemption placement at § 63-3622 better than amending § 63-3619?

Idaho's tax statute structure puts all sales-and-use-tax exemptions in § 63-3622 (subdivisions A through KK at the time the opinion was written). The use-tax statute (§ 63-3621) cross-references § 63-3622 exemptions, so an exemption added there automatically reaches both sales and use tax. Amending § 63-3619 (the sales tax imposition section) does not create a § 63-3622 exemption that the use tax would honor. The cleaner drafting puts new exemptions in their natural location.

What's the food-definition problem?

"Food" is not self-defining for tax purposes. A grocery exemption is a different policy than a restaurant exemption. Many states use the federal food-stamp definition (which excludes prepared meals, hot foods, and certain beverages) to draw a clean line. The initiative's silence would let courts or administrators draw the line case by case, and likely lead to litigation about marginal cases (premade salads, takeout pizza, prepared deli items).

Why does the income-tax credit matter?

Idaho Code § 63-3024A's $15 personal-exemption income-tax credit is widely understood as a sales-tax-on-food offset, even though the statute does not say so explicitly. If food becomes exempt from sales tax, the rationale for the income-tax credit weakens. The opinion suggests the petitioners should think about whether they want to keep both forms of relief (sales-tax exemption + income-tax credit) or just one. Repealing § 63-3024A in the same initiative would eliminate any duplication.

How does the effective-date issue affect retailers?

Idaho retailers collect sales tax through point-of-sale systems that have to be reprogrammed when tax law changes. An immediate effective date forces retailers to either over-collect (and owe refunds to customers later) or under-collect (and owe back tax to the state). Mid-quarter effective dates also force retailers to file partial-quarter sales tax returns, which the Tax Commission's forms may not be designed to handle. An effective date at the start of a calendar quarter avoids both problems.

Background and statutory framework

Idaho's sales and use tax framework is in Title 63, Chapter 36 of the Idaho Code. Idaho Code § 63-3619 imposes the sales tax (5% at the time of this opinion); § 63-3621 imposes a complementary use tax at the same rate. Sections § 63-3622 (and lettered subdivisions A through KK) list exemptions that apply to both sales and use tax. Idaho Code § 63-3024A provides a small income-tax credit historically understood as a sales-tax-on-food offset.

Sales tax exemption initiatives are politically common but technically demanding. The two main pitfalls are (1) leaving the use tax in place while exempting only the sales tax and (2) failing to define the exempted categories with enough precision to avoid administrative or judicial interpretation problems. This certificate is a textbook example of an AG flagging both issues so the petitioner can fix them before circulating signature petitions.

Citations

• Idaho Code §§ 34-1809, 34-1813, 63-3024A, 63-3619, 63-3621, 63-3622, 63-3622F

Source

• Landing page: https://www.ag.idaho.gov/office-resources/opinions/
• Original PDF: https://ag.idaho.gov/content/uploads/2018/04/C101395_b.pdf

Original opinion text

October 13, 1995
The Honorable Pete T. Cenarrusa
Secretary of State
HAND DELIVERED
Re: Certificate of Review; Sales Tax Initiative—Exemption for Food, Water and Clothing

Dear Mr. Cenarrusa:

An initiative petition was filed with your office on September 13, 1995. Pursuant to Idaho Code § 34-1809, this office has reviewed the petition.

MATTERS OF SUBSTANTIVE IMPORT

The proposed initiative provides for an amendment to Idaho Code § 63-3619 to exempt from sales tax the purchase of water, food and clothing. By failing to address use tax, the petitioners risk creating an inconsistency in Idaho law and have failed, at least in part, to accomplish their stated purpose.

ISSUES RELATING TO THE IDAHO SALES TAX

The initiative proposes to amend the sales tax statute instead of creating an exemption statute. Most of the exemption statutes from the Idaho Sales and Use Tax Act are codified at Idaho Code § 63-3622. The petitioners should strongly consider a change to the initiative to provide for the creation of a new exemption statute (a new Idaho Code § 63-3622LL) instead of amending Idaho Code § 63-3619.

If the initiative is not changed, the petitioners will not completely accomplish their objective of exempting food, water and clothing from the Idaho sales and use tax. Idaho Code § 63-3621 imposes a 5% excise tax on the storage, use, or other consumption in this state of tangible personal property. Because Idaho Code § 63-3621 only refers to the exemptions contained in Idaho Code § 63-3622, the use tax would still be due on food, water and clothing.

DEFINITIONAL PROVISIONS TO THE INITIATIVE

1. Definition of Food. The proposed initiative does not define the term "food." Many states which exempt food have some specific definition for food, such as a reference to the federal statute defining food for purposes of food stamps. As drafted, the term would exempt sales of the most expensive restaurant food as well as basic groceries.

2. Definition of Clothing. The term "clothing" is not defined. It is not clear whether the petitioners intended to exempt as "clothing" specialized sporting equipment such as uniforms, helmets, batting gloves, knee pads, lifejackets and other similar items. The term clothing would exempt the sale of items regardless of price.

3. Definition of Water. Water, when delivered to consumers at the place of consumption by means of pipes, wires, mains or similar systems, is exempted from the sales and use tax. See Idaho Code § 63-3622F. The petitioners' intent may be to exempt bottled water and other beverages made from water.

ISSUES RELATING TO IDAHO'S INCOME TAX ACT

Idaho Code § 63-3024A provides for fifteen dollars ($15.00) credit for allowable personal exemptions claimed on the state income tax return. Though not specifically defined as such, it is commonly understood the credit was created as an offset for sales taxes paid on food. The proposed initiative, by creating a sales tax exemption, may, to such extent, duplicate the income tax credit. If duplication of the income tax credit is not intended, the petitioners may wish to include a provision repealing Idaho Code § 63-3024A.

EFFECTIVE DATE

The petitioners have not proposed an effective date for the initiative. If the initiative passes, it will become law once the governor proclaims the initiative as approved by a majority of the voters. See Idaho Code § 34-1813. This allows no time to implement the necessary administrative mechanics for both retailers and the Idaho Tax Commission. Experience indicates it is better to have the effective date at the beginning of a calendar quarter.

CONCLUSION

The initiative does not accomplish what the petitioners intended. In order to accomplish the obvious purpose, the initiative needs to be redrafted and resubmitted as a new exemption to the Idaho sales and use tax.

I hereby certify that the enclosed measure has been reviewed for form, style and matters of substantive import and that the conclusion set forth above has been communicated to the petitioner, Mary J. Charbonough.

Yours very truly,
ALAN G. LANCE
ATTORNEY GENERAL

Analysis by:
BRIAN G. NICHOLAS
Deputy Attorney General
Civil Litigation Division