Facebook Twitter

U.S. DEFICIT-REDUCTION PLAN COULD PROVE TAXING TO UTAH

SHARE U.S. DEFICIT-REDUCTION PLAN COULD PROVE TAXING TO UTAH

Utah would lose about $6 million a year in taxes on gasoline, cigarettes and alcohol if the federal government increases its taxes on the same goods, a new study shows.

The National Conference of State Legislatures issued a report Tuesday saying higher federal excise taxes would increase the cost of taxed goods, result in lower overall sales and thus bring tax losses to states.The Bush administration has said it is considering such tax increases - despite Bush's "read my lips: no new taxes" pledge - to help decrease the federal deficit.

"Increased federal excise taxes are an encroachment on a traditional source of state revenue," said conference President Lee Daniels, who is minority leader of the Illinois House of Representatives.

"Federal budget negotiators must understand that states cannot accept proposals that would result in damage tostate fiscal systems, especially at a time when the federal government continues to reduce aid to states and increase mandates," he said.

Its study concluded that such taxes would raise about $19 billion for the federal government over the next five years, but would cost the 50 states $4.4 billion.

In Utah, the study by Peat Marwick Policy Economics Group estimated the state would lose $29.9 million over the next five years.

Those losses would include $24.8 million in gasoline taxes, or 3 percent of total gas tax revenue; $4.2 million in cigarette taxes, or 4.1 percent of revenue from that tax; and $900,000 in beer taxes, or 2.3 percent of beer tax revenue.

The report made those estimates assuming federal taxes would increase from 9 cents to 15 cents per gallon of gasoline, from 16 to 32 cents per cigarette pack and $9 to $18 per barrel of beer.

Utah already has a state tax on cigarettes of 23 cents per pack (24th highest among the states); it has a state gasoline tax of 19 cents a gallon (14th highest among the states); and a state beer tax of 35 cents a gallon (9th highest).

The legislators' group also wrote President Bush a letter Tuesday urging him to remove excise tax increases from discussion in his budget summit discussions with Congress.

"We view reducing the federal budget deficit at the expense of state fiscal systems as an unacceptable violation of the state-federal partnership," the group said.