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Restoring Utah's sales tax on food is still a "high priority" of Senate Republicans, Senate President Wayne Niederhauser, R-Sandy, said Wednesday.

But a corresponding adjustment to the income tax needs more time and consideration, he said, as lawmakers review the cost to Utahns under different scenarios.

"We've now discovered what impact that would have on different populations and that caused us some pause," Niederhauser said. "I think we may take a more incremental approach to broadening the base and lower the rate with the income tax."

At issue is the phase-out schedule of income tax deductions, which currently begin at income levels above $150,000.

Senate Republicans are looking at moving that threshold to $100,000 or lower, meaning Utahns at lower income levels would be excluded from some or all tax deductions, and offsetting the new revenue from that change by decreasing the state's income tax rate.

The move is part of a multi-pronged approach to stabilize state revenue streams, led by the Senate, that could also see a hike in the sales tax on food, paired with a drop in the overall sales tax rate, a freezing of property tax rates to capture inflation, and an adjustment to gas taxes that would trigger the indexing of tax rates at lower fuel prices.

Niederhauser said the sales tax adjustments are the most likely, and necessary, this session, as revenue from those sources have seen significant volatility.

"That's where we are suffering the most is the growth in our General Fund," he said, "which is funded by the sales tax."

The tax reform discussions are taking place at the same time that Our Schools Now, a ballot initiative backed by influential business leaders, is preparing to launch a signature-gathering campaign for the 2018 ballot.

The initiative would ask voters to approve an income tax rate increase of seven-eighths of one percent, which would generate roughly $750 million for public schools.

House Speaker Greg Hughes, R-Draper, said Tuesday that there is a concern among lawmakers that Utah's tax base is too narrow, but there's little appetite among the House for a tax increase.

A revenue-neutral approach that broadens the tax base minimizes volatility, Hughes said, which puts the state in a better position to respond to shifts in economic trends.

"We understand that in any revenue neutral situation there are winners and losers," Hughes said. "No one in our House caucus has signed up to vote for it tomorrow. We have to understand what those winners and losers feel like."

Low-income advocates have opposed an increase in the food tax because it falls disproportionately on poor residents, who spend a larger portion of their income on basics, such as food.

 He said members of the House are interested in having those discussions, but are also wary of policy that would hurt lower- and middle-income Utahns.

 "You can generate different scenarios and see how things fall out," Hughes said. "We are in the throes of that, and would like to see if there is something we can land on before the end of the session."

— Reporter Lee Davidson contributed to this report.

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