House favors bill to cut food tax

Most of their $17 million hit would come from funding that pays for operation of TRAX light-rail and bus lines, UTA spokesman Justin Jones said. The rest of the money would come from the recently approved sales-tax hike in Utah and Salt Lake counties to build rail lines.

"What this will do is delay construction of the recently approved rail lines, but more importantly, it will impact our service levels by 10 percent, or $13 million this next year," he said. "What we're talking about is impacting the very people who depend on us the most."

Agency officials said they were not opposed to removing the sales tax on food, but would like to find a way to keep UTA's funding whole, so that riders won't be impacted, Jones said.

Lawmakers need to act now if they want to further cut back on the sales tax on food, Newbold and House Speaker Greg Curtis, R-Sandy, told their fellow GOP caucus members this week.

UTA was given approval by voters in both Salt Lake and Utah counties last November to increase transit sales taxes by 0.25 percent. When that new tax takes effect April 1, UTA officials will begin bonding against the new revenue stream of $64.7 million to build commuter and light-rail projects in those two counties. Once bonds are issued against the 0.25 percent tax, it will be almost impossible to reduce the revenues then, the lawmakers warned.

There are 12 different kinds of specialty, or "boutique," sales taxes, said Newbold. They cover most of the state's population, so HB282 is really a tax cut on the most basic of necessities for most Utahns.

In the 2006 Legislature, lawmakers reduced the state's share of the sales tax on food by 2 percent, to 2.75 percent.

HB282 doesn't touch the 1 percent city sales tax, the 0.25 percent county sales tax and the remaining 2.75 percentage points of the state's sales tax on food. But the bill would make the food sales tax 4 percent statewide, making it easier for grocery stores and other food retailers to comply with the complex sales-tax law.

"There are today 97 different sales-tax rates, or districts, in the state," said Newbold. The goal of HB282 is to reduce the food tax further, but food tax simplicity is another side benefit.

House Majority Whip Gordon Snow, R-Roosevelt, said rural areas of the state could still be harmed by HB282. He asked that before the Senate considers it, if Newbold could look at ways to "make whole" other districts that rely on the boutique sales taxes, such as a city road district.

Newbold promised to consider all options.

But 19 House Republicans and Democrats voted against the bill.

House Minority Leader Ralph Becker, D-Salt Lake, said Salt Lake County voters in November by large majorities voted in the new 0.25 percent transit tax and renewed the current 0.1 percent county-wide ZAP tax. Trimming back the tax base for both those taxes, and thus cutting those revenues, would clearly go against what county residents want, he said.

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Contributing: Lisa Riley Roche

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E-mail: bbjr@desnews.com; nwarburton@desnews.com