Will state opt for tax cut on food and income?

Published: Thursday, Feb. 15, 2007 12:08 a.m. MST
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How would you like an income tax cut and a reduction in the sales tax on food?

As Gov. Jon Huntsman Jr. and GOP House and Senate leaders hash out a tax cut package that could carry a price tag of $200 million or more, those two options seem clear. Or as clear as anything can be in the shifting sands of the Utah Legislature.

"We are working on those same (two) taxes," said House Majority Leader Dave Clark, R-Santa Clara, after GOP legislative leaders met together with Huntsman and separately through much of Wednesday.

Senate Majority Leader Curt Bramble, R-Provo, said he and Clark are putting together a "new concept" intended to give senators a version of the income tax reform that they — and the governor — want, along with some reduction in the sales tax on food as sought by the House.

The top level negotiations will continue Thursday morning with a hope that legislative leaders can bring a compromise package to their respective GOP caucuses at noon today.

One item has been agreed upon: The new 5.35 percent flat-rate income tax (which only officially took effect Jan. 1) would be changed to a 5.0 percent flat rate tax.

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Still to be worked out is what kind of tax credits would be pushed into the flat rate income tax system to encourage more Utahns to move over from the long-time state personal income tax system that has multiple deductions and exemptions.

That old tax system would stay in effect, so Utah would have a dual track income tax package.

House Republicans this week voted in caucus to lower that old top rate from 6.9 percent to 6.7 percent. But Clark, author of that plan, says House Republicans will likely have to increase that 6.7 percent top rate slightly to get senators to go along.

Bramble acknowledged that in coming up with a new income tax bill, "the concern there is simplicity," especially in areas like proposed tax credits to encourage more Utahns to switch to the flat-rate system.

And while the House Republicans have to give a little on the income tax cuts, GOP senators will have to agree to another round of food sales tax cuts.

Also starting Jan. 1, the state's 4.75 percent sales tax on food dropped to 2.75 percent.

Clark and other House Republicans wanted to drop that food sales tax to 0.75 percent starting July 1. Clark said Wednesday that leaders really haven't reached an accord on the food tax — concentrating as they have been on what shape the income tax reform should take.

GOP senators have already said they'd be willing go along with the removal of locally imposed, so-called "boutique" taxes from food purchases. Bramble said now they're also going to look at trimming the state sales tax rate.

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