Lawmakers, public debate latest tax reform proposal

20191125 Tax Meeting

Well, one more public hearing, one more day closer to a significant tax restructuring in Utah.

The Tax Reform Task Force heard from dozens of unhappy taxpayers Monday night in a four-hour hearing.

 But the hard fact is Republicans in the Legislature and GOP Gov. Gary Herbert are moving toward a Dec. 12 special session where the core of tax reform will be debated, and likely passed.

If you think the tax reform draft bill looked at Monday fits what most of the task force members like, you could be wrong.

But will most of the members accept it? Yes, with some changes still to come.

Task force co-chair Sen. Lyle Hillyard, R-Logan, said he believes the working bill falls short because it does not extend the sales tax to more services.

Rep. Tim Quinn, R-Heber, the original sponsor of HB441 in the 2019 session, agreed, saying the large bill doesn’t look adequately at the future.

Various studies show that over recent time, the sales of “unprepared” food is down 71 percent. More and more, people are buying some kind of prepared food, either at the store or in restaurants.

Secondly, while gasoline tax take is now growing — if only slightly — in the next decade or two that gas tax will decrease — as more and more folks drive electric or hybrid vehicles.

So, all the effort of today’s reform will not last for long.

Quinn and Hillyard say only about $30 million is coming from extending the sales tax to services, and really much, much more money should be coming from services — which was the gist of Quinn’s HB441 in the last session, but not reflected much in the task force’s recommendations.

New modeling released Monday night shows that 73 percent of Utahns will get a tax cut — the largest coming to families making between $40,000 to $60,000 a year.

While 27 percent, on average, would pay more. But how much more is the real question, and it could be not much — depending on the individual or family’s positions.

And those who pay more could be paying it in sales tax or gasoline tax — and the price of gasoline could fluctuate a great deal, and of course, some folks, like those in rural Utah, pay great differences when it comes to how much they drive each year.

Rep. Robert Spendlove, R-Sandy, an economist, put forward various options that would decrease the percentage of folks who would see any tax hike, mainly by changing the size of income tax deductions and the size of the per-person tax rebate given to low-income folks in return to putting the sales tax back on unprepared food.

One Spendlove option would give an overall $124 million tax cut instead of an $80 million cut.

Kristen Cox, Herbert’s budget director, said Herbert is always looking for a more significant tax cut — she likes the $124 million tax cut. And that could even include a small sales tax cut, which sounds counterproductive since the main idea of this whole restructuring effort is to get more money in sales tax and reduce the income tax — all without harming public education funding.


Join the club.

It is clear much tweaking still needs to be done before the final bill is given to the Dec. 12 special session. Lawmakers announced they would meet again on December 9.