This is the question that many states have been asking lately.
Is take-and-bake pizza considered a prepared food or a grocery item? Most states charge tax on food that’s sold ready to eat, while food that you must prepare at home is not taxed.
The question was initially raised by take-and-bake chain Papa Murphy’s, which has stores in several states, all with different laws when it comes to taxing prepared vs. nonprepared foods. The company just wants a solution that can be used across all of its stores.
The tax base on goods has shrunken dramatically since the 1960s, leaving many states searching for new and creative ways to tax services and goods.
I asked around and got differing opinions on whether or not take-and-bake pizzas should be taxed.
“Taxing pizza should be against the law. It’s a no win for pizzerias,” —Tom Feltenstein, TomFeltenstein.com.
“Take and bake pizza isn’t ready to eat, so it shouldn’t be taxed as if it was a finished product. It’s not a dish you have the option of eating before it’s baked. Places like Papa Murphy’s are selling raw ingredients that just happen to be portioned and assembled for a dish.” –Scott Wiener, owner of Scott’s Pizza Tours and author of Viva la Pizza
“We have prepared foods such as fully prepared (baked) pizza served dine-in, take out or delivered, hamburgers, lunch at Long John Silvers and dinner at Olive Garden, and yes even that fully cooked chicken you can get at your local supermarket or Walmart which are normally taxed at some rate we’re all familiar with, then we have what I like to call “groceries.” These are uncooked food items such as cuts of beef, pork, chicken, fish/seafood, fruits, vegetables, and unbaked/uncooked items such as frozen pizzas, frozen meals, deli-pizza and take and bake pizza (I see no real difference between a frozen pizza, take and bake pizza, deli-pizza, or a raw pork chop). If the state, county or municipality has a different tax rate for “groceries,” any product fitting into that category, whether sold at a supermarket or specialty store (Papa Murphy’s, a free standing seafood shop or a local butcher shop selling cuts of beef or pork) should be taxed as such.” –Tom “The Dough Doctor” Lehmann
“I hate to side with more taxes on anything, but in this case it is probably best to have everything selling at the restaurant on the same tax bracket. While I enjoy no taxes when available, I think that this could create a mess for accounting and too many independents might get into trouble if their accountant isn’t sharp on this.” –Jonathan Porter, owner of Chicago Pizza Tours
What’s your opinion? Should take-and-bake pizzas be taxed like groceries or prepared food items? Let me know in the comments below.