Time to end food tax?

Now is the time to take the sales tax off food, Gov. Jon Huntsman Jr. said Monday, giving the tax break "a fighting chance" of being included in a new plan for tax reform.

"I think it's a very legitimate question, and sales tax on food will be part of our discussion over the next six months. It's why I haven't done anything about it to date," the governor said during a taping of his monthly press conference televised on KUED Channel 7.

Eliminating the sales tax on food was one of Huntsman's campaign pledges. He hasn't pushed the issue, however, choosing instead to have it considered by the state's Tax Reform Task Force that will make recommendations for the 2006 Legislature.

"I wanted to make sure that I logically added it to overall tax reform. You can't do it separately," the governor said. But Huntsman did try — unsuccessfully — to get the 2005 Legislature to go ahead and agree to phase out the corporate income tax.

The governor said he believes the task force will give taking the sales tax off food a fair hearing. "I think it will be debated fully there," said Huntsman, who appointed two of the 15 members of the task force.

"The sales tax on food, just as one aspect of tax reform, could help a lot of those who are on fixed incomes, are working citizens, or who are retired," the governor said. "I believe it hits people where it shouldn't."

Whether to remove the sales tax from food has long been debated in Utah, but it carries a price tag of more than $160 million just for the state's share of the tax. Local governments collect an additional $58 million in sales taxes.

After several tough years, the economy is showing surprising strength. An additional $112 million in revenues are expected to be collected this year, according to the latest analysis by the Utah State Tax Commission.

Numbers like those have led some lawmakers to call for tax cuts in addition rate changes through tax reform. The governor, though, has said the tax reform process must be revenue neutral.

Asked after Monday's taping about how the call for tax cuts could affect the move to take the sales tax off food, Huntsman said, "now is the time to do it. . . . I think it has a fighting chance. I think tax reform has a good chance, perhaps a very good chance."

Other reforms being considered include extending sales taxes to services, establishing a flat individual income tax rate and phasing out corporate income taxes.

Task force leaders have said everything is on the table, including taking the sales tax off food. Huntsman said after the taping that the issue has been opposed by "rural constituencies" that depend heavily on the taxes collected at local food markets.