So, is Utah’s food tax exemption really safe, now that GOP lawmakers and Gov. Gary Herbert plan to repeal the new, huge tax reform bill passed just over a month ago?
My guess is — Yes.
At least for some time.
Utah state government is run by Republicans.
And they have taken a real public beating over the tax reform effort — and learned (or should we say, relearned) a very painful lesson: Don’t undertake major shifts in public policy without most voters being in favor of it.
For months last year, poll after poll (many of them by UtahPolicy.com and Y2 Analytics) showed large majorities of Utahns DID NOT want the current tax break on unprepared food removed.
Still, Republicans on the Tax Reform Task Force — driven by their leaders — didn’t listen.
There could be several reasons for this, but the main one, I believe, is that the sales tax exemption on food was just too large a dollar-apple to resist.
It was that huge low-hanging fruit just before their little hands, all they had to do was pick it.
But it turned out to be the politically poison apple.
They got it into the tax reform bill, took a bit, and the public said it was sour.
Not for them at all.
The voters weren’t swallowing it.
According to the final fiscal analysis prepared for the task force last December, just before the special session that saw the tax reform bill pass 43-27 in the House and 19-7 in the Senate, putting the full 4.85 percent state sales tax back on unprepared food would bring in $250 million dollars a year.
The tax bill called for at least $135 million in income tax rebates to low-and-middle income Utahns to offset that food tax hike.
But the rebates would come in the income tax — which by Constitution is restricted for schools, and the Education Fund.
So, by putting the sales tax back on food, the General Fund — which is suffering slower tax growth these days, the whole reason behind all of this tax reform — would see the whole $250 million revenue jump.
Taking away that tax break could be tough politically, admittedly, the GOP bosses figured.
But with the poorer folks getting $125 per person food tax rebates — actual checks in the mail if they owed no income tax — then the low-income folks would actually come out ahead, overall.
This was true.
State leaders never lied to the populace. This is important to understand.
But what the leaders didn’t realize — or understand themselves — is that raising the food tax, and the gasoline tax, as well, could, and would, be used by opponents to greatly oversimply the political argument.
And drive the voters against tax reform.
Thursday, Herbert and GOP legislative leaders decided to cut their losses. They will repeal tax reform.
And while they don’t say now “drop dead” to Utahns who turned their backs on a $160 million tax cut — that could be coming this 45-day general session, which starts Monday.
In an election year for all 75 House members and half of the 29-member Senate, if the GOP majority refuses to give any tax cuts with the now-freed-up $160 million — finding any number of reasons not to — then voters will have yet another reason to resent what’s been happening on Capitol Hill over the last 12 months.
Remember, this is the same Legislature and same governor who in a special session greatly changed the Medical Marijuana citizen initiative, just weeks after voters passed it November 2018.
Weeks later, in the 2019 Legislature, the same group changed the full Medicaid expansion, which also passed by voters in the same election.
Then came tax reform, which was passed in last month’s special session — only to give rise to a volunteer-based citizen referendum repeal signature drive.
And now it will be killed by those who passed it.
I’m not saying three strikes and you’re out — this isn’t baseball, it’s Utah.
And Republicans will be returned to a legislative majority in November, where voters will almost for sure pick a new Republican governor. (Herbert isn’t running again.)
I am saying we won’t be seeing a new effort to put the sales tax back on food any time soon.
Republicans in the Legislature then passed a public school voucher bill, which was quickly repealed via referendum by voters.
We haven’t seen another voucher attempt in 12 years.
If history is followed, the sales tax break on food is safe until 2032, at least.
So, it will be back to the drawing board for tax reform in Utah.
But that won’t happen in the 2020 Legislature.
It probably won’t happen for some time.
And watch the GOP legislative majorities to be jumping through all kinds of hoops to find ways to put more income tax money into non-public school budgets.
With public school advocates now embolden to fight in the courts or ballot box trying to stop that, as well.
The 2019/2020 tax reform in Utah has taken a lot of time, a little money (not all that much was spent on the Tax Reform Task Force), and has spilled political blood all over the place.
I don’t see a serious, broad-based attempt at more tax reform for several years, at least.
And the tax break on food is safe, for some time to come.