In the next few weeks, the Salt Lake Area Chamber of Commerce will educate its members on the effects that elimination of the sales tax on food will have on state and local government and other entities such as the Utah Transit Authority and the Utah Sports Authority.
Mark Miller, vice chairman of the chamber's board of governors, told board members the chamber will be in the forefront of the education process in the next few weeks, distributing information to chamber members.After that is complete, a survey of the members will be taken and that will have a bearing on whether the board votes to support or oppose the proposal to remove the sales tax on food.
Three weeks ago, Lt. Gov. W. Val Oveson announced that 69,000 people had signed petitions to get the sales tax removal issue on the November ballot, according to Patricia Simmons, government affairs director for the chamber, who gave board members an update on the impact the tax removal will have.
Simmons said federal funds, the General Fund and the Uniform School Fund make up the majority of the Utah budget. The Uniform School Fund is dedicated to public education, and the general fund consists mainly of sales and use taxes.
The Utah sales tax rate is 61/4 percent, and the sales tax on food is about 12 percent of the total revenue produced by the sales tax, she said. Most of the sales tax goes to state government while cities and towns receive nearly 1 percent, UTA gets 1/4 of 1 percent in four counties; and the sports authority gets 1/32nd of 1 percent to build Olympic facilities.
If the referendum is approved by voters in November, Simmons said the loss of revenues is estimated at between $100 million and $110 million.
She said one alternative to the sales tax on food is eliminating services, but that isn't a practical option because of pressing needs in education and human services.
Another alternative is to raise property taxes, raise corporate franchise taxes, hike severance taxes and increase taxes on liquor, beer, tobacco, investment income and motor fuel.
A third alternative is to eliminate some or all of the 34 sales tax exemptions. If these were eliminated, Simmons said the amount collected would offset the loss of $100 million, but many of them were approved to help economic development.
Simmons said state officials estimate a $30 million-$40 million surplus this year, but surpluses might not occur each year. "We cannot depend on the fact that we will have surpluses every year to justify removing the sales tax on food," she said.
The chamber can either oppose or approve of the proposal to remove the sales tax on food or educate chamber members, work with other chambers to educate their members and work with other organizations. The chamber can also work with agencies that will be impacted by removing the sales tax on food like higher education, public education, handicapped groups, businesses that have exemptions and social services agencies, Simmons said.