From Deseret News archives:

Utah tax cut no slam dunk

Huntsman doubtful, but some lawmakers pushing cut, reform

Published: Friday, May 20, 2005 9:39 p.m. MDT
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Don't look for Gov. Jon Huntsman Jr. to back a tax cut, even though state revenues are piling up faster than expected.

"I don't think we can do a tax cut," Huntsman told the Deseret Morning News. "But we can do tax reform, which I think will be done in a revenue-neutral fashion — it must be done in a revenue-neutral fashion."

Lawmakers serving on the state's Tax Reform Task Force, however, have a different idea. Not only have several members of the task force come out in favor of looking at a tax cut, the group itself has pledged to "right-size" government.

And that means reducing the overall amount of revenue state government collects from taxes, not just shifting the amount of money coming in from income, sales, property and other levies.

The latest figures from the Utah State Tax Commission anticipate an additional $112 million in revenues this budget year, mostly in income taxes. And the 2005 Legislature had more than $600 million in extra money to spend.

Huntsman does favor eliminating corporate income tax and appears to be leaning toward a flat income tax rate for individuals. However, he said those cuts likely would be offset, at least in part, by extending sales taxes to services as well as goods.

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Under that plan, similar to what was proposed by former Gov. Olene Walker, Utah taxpayers might end up with a lower income tax rate but paying more in sales taxes, since services such as health care account for two-thirds of the state's economic base.

Getting rid of the corporate income tax is supposed to result in more revenue for the state, not less, by boosting economic development. Huntsman said it "produces more in the way of growth over the five- or six-year phase-out time. I don't see that as a net loss."

There's a push by at least some lawmakers for a tax cut on top of any tax reform next year, when all of the House and half of the Senate will be up for re-election. Fueling their focus on seeing that government gets less money is the ever-growing state surplus.

Because of the surpluses, Senate President John Valentine, R-Orem, has said if revenues continue to increase, he has "a strong interest in looking at a tax reduction" next year — a tax cut, not a one-time rebate.

Another GOP senator, Curt Bramble of Provo, said the task force will consider cuts as they review the state's tax system. "I haven't been committed to a revenue-neutral process since day one," said Bramble, the co-chairman of the task force.

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Senate President John Valentine: "(I have) a strong interest in looking at a tax reduction next year."

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