Even as members of the state's Tax Reform Task Force talk about eliminating exemptions and expanding the tax base, some of them have voted to recommend cutting the rate on a special type of insurance policy premium.

"It's not a tax break," task force co-chairman Sen. Curt Bramble, R-Provo, said. "It's bringing in activities of a company that otherwise wouldn't come to Utah . . . a revenue stream that wouldn't happen."

The company, Fidelity Investments, already has an office in Salt Lake City. But the company wants the insurance premium tax changed before it will sell a specialty policy aimed at big companies seeking to protect themselves against the loss of top executives.

Currently, the tax is 2.25 percent for all types of life insurance. David Pearlman, a Texas-based vice president and general counsel for Fidelity Investments, said South Dakota offers a better rate on the specialty policies.

Pearlman got members of the task force's subcommittee on redevelopment agencies and other taxes to support the same deal — 2.25 percent on the first $100,000 of the annual premium for such policies, and just 0.08 percent on any remaining premium costs.

The subcommittee made the recommendation after only brief discussion during the last few minutes of a two-hour meeting. The rate reduction now will be considered by the entire task force as well as an interim legislative committee.

Subcommittee chairwoman Rep. Merlynn Newbold, R-South Jordan, asked Pearlman whether the decision would bring more jobs to Utah. Pearlman said the additional staff needed could go to other company offices in New Hampshire or Massachusetts.

"I can't promise," he said.

Bramble, the subcommittee co-chairman, said without the change Utah is guaranteed to lose the opportunity for more jobs to South Dakota. "They've made it clear this would not happen in Utah unless we make the change."

Economic development, a campaign pledge of Gov. Jon Huntsman Jr., is a key piece of the tax reform effort. Huntsman has already come out in support of phasing out the state's corporate income tax.

Huntsman spokeswoman Tammy Kikuchi said the decision made by the subcommittee Tuesday is "not really a tax break because this type of business doesn't currently exist in Utah. . . . If anything, it will have the effect of bringing more revenue to the state."

Members of the Sales and Use Tax Subcommittee examined the potential impacts of removing many sales tax exemptions and "broadening the base" by taxing services.

The subcommittee was reluctant, however, to immediately make recommendations, especially since the actual fiscal impacts and how far the general sales tax rate could be lowered were not yet available.

The subcommittee did vote down one motion, made by Utah Tax Commissioner Pam Hendrickson, which would have recommended the removal of all sales tax exemptions except for a few types of transactions. Primarily, subcommittee members said they are mostly concerned with rushing through the process and making decisions without enough information.

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