Stephenson, president of the Utah Taxpayers Association, talked subcommittee members into taking utilities out of the business "inputs" tax cut, saying Utah's utility industry is now well-managed and competitive with surrounding states' utilities and doesn't need that kind of a tax break.

Tax Commission chief economist Doug Macdonald argued that the business sales tax cut should only apply to the purchase of operating materials that last longer than three years. "That would be more in line" with the current manufacturers' tax exemption on replacement and new long term equipment.

Buying new equipment may make a business more profitable, more competitive, and to give a sales tax break for that makes sense, Macdonald said. But to give a sales tax break "on chemicals a firm may use" in its production won't necessarily make the business more productive — it's just a tax break, he said.

The subcommittee also recommended a previously discussed credit for taxes on unprepared food paid by lower-income Utahns. Explained in detail in previous Deseret Morning News reports, the credit is one suggested by Utah Issues, the low-income advocacy group. Basically, any family making less than $30,000 a year ($18,000 a year for an individual) would get a $75 refund per family member (or individual) per year on their state income taxes.

While rather simple in concept, the credit would work in theory but wouldn't in practice, other low-income advocates say. They point out that poor Utahns wouldn't actually receive the reimbursement because many, if not most, don't file tax returns now and aren't likely going to file a sales tax refund requests in the future.

Expanding that proposal, however, could be palatable to task force members as a way to shift the impact felt by lower-income taxpayers if a flat tax is approved or current exemptions are removed. A 4 percent flat tax proposal was considered briefly by the full task force Wednesday and narrowly tabled after members said said they wanted to make sure all pending reform proposals are considered first.

"Philosophically, I suport the proposal, but the proposal runs smack into the political reality that this could have some very serious impacts on certain segments of society," said task force co-chairman Curt Bramble, R-Provo.

The sponsor of the motion to approve the flat tax, Rep. Greg Hughes, R-Draper, said that this was an important "stake" in the tax reform effort and that the notion of a flat tax is widely supported. With the task force endorsing the idea, the public could then help tailor how it is implemented, he said. "If we could deliver to our constituents something with the simplicity of a postcard for their tax bill they would appreciate it."

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E-mail: bbjr@desnews.com