Despite pleas to ‘don’t rush,’ Utah tax task force advances reform proposal
Group accepts amendments to remove sales tax from feminine hygiene products, add earned income tax credit
SALT LAKE CITY — Nearly 30 people lined up at the Legislature’s tax reform task force meeting Tuesday night to voice their concerns about proposals for restructuring Utah’s tax system that include restoring the full sales tax on food, adding sales tax to gasoline purchases and services while cutting income taxes.
“Don’t rush this,” urged Susan Olson of the Utah Citizens Counsel, saying there clearly was “no consensus” among members of the Tax Restructuring and Equalization Task Force about what should be done to deal with the growing imbalance between sales and income tax revenues.
But despite spending several hours reviewing a series of proposals from other members of the task force, including Senate Minority Leader Karen Mayne, D-West Valley City, and two of the three tax experts, the plan advancing is from the Republican task force co-chairmen.
House Majority Leader Francis Gibson, R-Mapleton, and Sen. Lyle Hillyard, R-Logan, unveiled their plan last Friday after sharing it with legislative leaders earlier in the week. They are calling for an overall tax cut of about $79 million by imposing new sales taxes on food, gas and services while reducing the state’s 4.95% income tax rate.
“There’s never a done deal,” Gibson told reporters later, promising there could be changes to the bill once it’s drafted.
There was some friction at the end of the five-hour meeting over how to proceed.
But the task force did accept an amendment to the chairmen’s proposal to include a piece of Mayne’s proposal, removing the sales tax from feminine hygiene products, and an earned income tax credit aimed at curbing intergenerational poverty suggested by Rep. Robert Spendlove, R-Sandy.
Those were the only changes made and a bill will be drafted for consideration at the next task force meeting on Nov. 7. Both House Speaker Brad Wilson, R-Kaysville, and Senate President Stuart Adams, R-Layton, have said they hope to have a tax cut in place by the end of the year, which would require a special legislative session.
The task force also agreed to have bills drafted to start the process for amending the Utah Constitution to get rid of the earmark on income tax revenues for education and to establish a “stable” source of revenue for schools to replace income taxes, apparently the subject of ongoing negotiations with the education community.
“I think we need to come together,” Mayne said, questioning the negotiations.
Other members of the task force balked at opening a bill file when it’s not clear what the funding source would be.
“I would at least like to know what we’re thinking about,” Sen. Lincoln Fillmore, R-South Jordan, said, noting that Tuesday was the first time the need for a new revenue stream for schools had been brought up.
Sen. Curt Bramble, R-Provo, who voted with Democrats on the task force against some of the motions to move forward with bill drafts, said he was not ready to vote for advancing a proposal that only surfaced last week when there are five other proposals from task force members.
Those ranged from a Utah Taxpayers Association plan presented by Fillmore giving Utahns a $446 million tax break by dropping the income tax rate even lower than the 4.7% in the co-chairmen’s proposal and boosting the dependent exemption even higher, to a $684 million tax hike, largely the result of imposing a new carbon tax.
Rep. Joel Briscoe, D-Salt Lake City, who tried and failed to pass a carbon tax last session, said the additional revenue could end up being distributed to every Utah resident, similar to what Alaska does with oil revenues. He also called for removing all of the sales tax on food and adding sales tax on gas.
There were also proposals for a $100 million-plus statewide property tax and hefty increases in the transient room tax, all possible solutions to resolving the impact on the budget of income tax collections outpacing sales tax revenues as consumer spending shifts from goods to services.
The task force was created by the 2019 Legislature after a House bill adding new sales taxes to a long list of services ranging from haircuts to legal advice was pulled by legislative leaders amid protests from the business and professional communities.
The co-chairmen’s proposal would impose sales taxes on a number of services, including Uber and other ride-sharing options, video streaming and newspaper publishing, as well as on veterinarians, tour operators, fine arts schools and wedding planners.
Representatives of many of those professions were among those testifying Tuesday.
Nathan Whiting, a veterinarian in Perry and Tremonton, said “pets are valued members of many of our Utah families and provide an important source of companionship” and that “owning a pet should not be categorized as a luxury.”
Others testified against various sales tax increases.
Raising the 1.75% state sales tax on food to the full 4.85% rate “could push families at the tipping point over the edge into a crisis,” warned Bill Tibbetts of Crossroads Urban Center, even with a proposed refundable grocery tax credit.
Utahns Against Hunger’s Alex Cragun said the average low-to-middle income family in Utah will spend an extra $172 to $252 a year on food if the full sales tax is put in place, hitting them harder because they spend a larger share of their income at the grocery store.