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Food-tax hike is dead in Utah's Legislature

Published March 7, 2017 4:26 pm

Scramble • Other tax, fee proposals still are debated with three days remaining in the 2017 session.
This is an archived article that was published on sltrib.com in 2017, and information in the article may be outdated. It is provided only for personal research purposes and may not be reprinted.

The sales tax on food will not be raised, at least this year.

With time running out on the legislative session that ends at midnight Thursday, Senate leaders were pushing hard to bring back the full state sales tax on food, which was slashed during the tax reforms of a decade ago.

A highly unusual joint House and Senate tax committee hearing was scheduled for Tuesday night to expedite the bill, which still has not been publicly released.



But the House has been reluctant to go along with the tax hike. After meeting for hours in a series of closed-door caucuses over the last several days, House Speaker Greg Hughes confirmed Monday evening that there would be no food tax hike this year.

He said lawmakers had the "political will," to pass tax reform. But modeling suggested the benefits to the state would be less significant than anticipated.

"At the end of the day, you have to reflect on why you're doing it."

Senate President Wayne Niederhauser, R-Sandy, said discussion on tax reform — including the sales tax on food, income tax exemptions and other tax credits — will continue over the summer months ahead of potential legislation next year.

There is still a need to stabilize the state's shrinking General Fund, he said, but analysis showed the sales tax on food had a relatively small impact on overall sales tax receipts.

"Thankfully we found that out today before we jumped off that cliff," Niederhauser said.

Pamela Atkinson, an advocate for low-income and homeless Utahns, said she trusted lawmakers to "do the right thing" on tax reform.

"We do need to find more money, but we need a process to allow the people who are being affected to have their input and the legislators are willing to listen," she said. "That's what makes our state so great."

Republican leaders, Neiderhauser chief among them, had sought to restore the full sales tax on food — up from the current 1.75 percent — and lower the rate on other, non-food purchases — which is now at 4.7 percent. Under the proposal, the new sales tax rate would be set at about 4.4 percent and it would mean almost no change to the state's overall tax revenue.

But getting the numbers to add up had proven difficult and the bill had been delayed for weeks as Republican leaders in the House and Senate tried to iron out the wrinkles.

Hughes said lawmakers were committed to receiving public input, but finding a working proposal for both chambers took time in the short, 45-day legislative session.

"If we had come together on a plan there would have been public hearings," Hughes said. "We are late in the session, but that is not unique to difficult legislation."

Evelyn Everton, president of the Americans For Prosperity Utah, which generally opposes tax increases, said she was glad to hear the bill wouldn't be considered this session.

"We have never really weighed in on the policies being discussed, but we've always said it shouldn't be done the last three days of the session," she said. "We have a process for a reason."

There are, however, other increases proposed for the state gasoline tax, the state's markup on alcoholic drinks, phone service, and driver license renewal fees.

A proposal to raise the income tax on the rich, while decreasing the tax on the poor, also is being abandoned this session.

Lawmakers say they ran out of time to work out problems in that plan, but will look at it during the year.

And they killed a proposal to improve collection of sales tax for online purchases (which is already technically owed, but often not paid). It was defeated after legislative attorneys warned the bill might be unconstitutional.

Following is a look at some of the tax proposals that are still moving:

Gasoline tax • Newly released projections by legislative analysts say a bill designed to start automatic gas tax hikes sooner and allow them to rise faster would increase taxes about 0.6 cents per gallon next Jan. 1, and 1.2 cents a gallon the next year.

The current state gasoline tax is 29.4 cents a gallon.

The proposed increase through SB276 could cost a typical motorist — who drives about 12,000 miles a years in a vehicle that gets 20 miles to the gallon — about $3.60 next year, and $7.20 in 2019, analysts say.

In 2015, the Legislature voted to raise the gas tax by 4.9 cents a gallon, and included a provision to allow automatic tax hikes as gas prices rise.

But gasoline prices were high in 2015 when that was enacted, and target prices for when to trigger increases were also set relatively high. Gas prices have since plummeted.

Because of that, analysts said that the automatic tax hikes originally expected to begin next year actually would not have come until 2028.

The bill also allows for bigger tax hikes annually. The bill's sponsor, Sen. Kevin Van Tassell, R-Vernal, said the increase is needed to keep pace with inflation to help maintain the state's roads.

Alcohol tax • A tax hike is included in an alcohol-reform bill that has attracted attention mostly for creating new alternatives to the much-maligned "Zion Curtain," the 7-foot-tall barrier designed to keep children from seeing drinks mixed in restaurants.

HB442 would increase the state markup on liquor by 2 percentage points, from 86 percent to 88 percent. The markup on heavy beer sold in liquor stores would go up from 64.5 percent to 66.5 percent.

Its sponsor, Wilson, said money from the increase would fund new training and prevention programs included in the bill targeting underage drinking and overconsumption.

911 tax • Utah telephone users soon could pay an extra 52 cents a month on every cellphone and landline — a 68 percent increase.

They now pay 76 cents a month, but that would rise to $1.24 a month under SB198.

Its sponsor, Sen. Wayne Harper, D-Taylorsville, said the money would help upgrade what officials say are antiquated 911 and public safety radio systems statewide. Also, the bill would also make many reforms to the Utah Communications Authority after an official embezzled $1 million from it recently.

Driver license fees • HB388 would increase numerous fees by the Driver License Division. Its sponsor, Rep. Eric Hutchings, R-Kearns, said such increases come about once a decade, and help the division keep up with inflation.

Renewing a regular driver license would jump from $25 to $35.

Learner permit fees would jump increase from $15 to $20.

Additional fees for a motorcycle license would increase from $9.50 to $12.

For a commercial driver license, the knowledge test would increase from $40 to $50 and the skills test from $60 to $70. Each different endorsement for a CDL — such as for a school bus, or to drive vehicles transporting hazardous materials — would increase from $7 to $10.

— Tribune reporter Lee Davidson contributed to this story.

 

 

 

 

 

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