2 tax-cut bills advance to House floor

Two big tax-cutting bills are already headed to the House floor, just one week into the 2007 Legislature.

HB123, approved by the House Revenue and Taxation Committee on Monday, would cut state income taxes by $102 million and trim state sales taxes on food by $176 million. It would be a $279 million tax cut from ongoing funds this year. "This continues the tax reform started last year," said the sponsor, Rep. John Dougall, R-Highland.

The committee also advanced HB282, sponsored by Rep. Merylynn Newbold, R-South Jordan, which would create a single sales tax rate of 4 percent for food purchases statewide by removing the sales tax for food from transit taxes and other locally assessed so-called "boutique" taxes.

All Republicans on the House Revenue and Taxation Committee voted to advance Dougall's bill. Democrats voted against it, saying it was too early in the session to adopt such a large tax-cutting bill. Newbold's bill, however, picked up some Democratic support.

But if HB123 passes the House, it isn't expected to get very far in the Senate. Senate Majority Leader Curt Bramble, R-Provo, said any tax-cutting bills coming from the House will be held until an agreement is reached between House and Senate GOP leadership.

And there's no support among Senate Republicans for a provision of the bill that would eliminate the remaining state share (2.75 percentage points) of the sales tax on food. Bramble said the Senate would demand a statewide referendum on such a tax cut.

But HB282 could be a different story. Senate Republicans decided in a closed-door caucus Saturday that they'd be willing to consider establishing a single sales tax rate statewide for food purchases.

Still, Senate President John Valentine, R-Orem, said Monday there are concerns about making up the estimated $20 million in taxes that would no longer be collected under Newbold's bill.

Newbold's bill would only reimburse local governments for about $400,000 in rural hospital taxes and allow a slight increase in the resort communities tax to help offset the losses. Valentine said the Senate would want to look at doing something similar for other taxes.

Much of the discussion in Monday's hearing on the tax bills centered on Dougall's more sweeping proposal. Public education officials and low-income advocates spoke against the measure, even though it would eliminate the state's share of sales tax on food.