From Deseret News archives:

Statewide sales tax worrying officials

Plan could force cities to lean heavily on property revenue

Published: Thursday, Oct. 20, 2005 9:45 a.m. MDT
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City officials worried about losing a significant sales-tax revenue dominated the first in a series of public hearings about proposed tax reforms.

Proposals forcing cities to lean more heavily on property taxes, such as a statewide sales tax or a shift in the current 50/50 distribution formula, were the chief concern. Cities with small populations but with big retail outlets or large corporate centers would be hit especially hard.

The statewide sales tax, as proposed by the co-chair of the Tax Reform Task Force, Rep. Wayne Harper, R-West Jordan, would shift the 1 percent local sales tax option from cities to schools. Instead, cities would be allowed to raise their property taxes to make up the lost revenue.

Larry Hansen, Riverdale city administrator, said that the city of 7,000 residents receives 75 percent of their revenue from sales tax. Changing that would mean that residents would have to bear a significant burden to provide services, many of which are now a necessity because of the retail businesses.

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"We feel like this would be very difficult to cope with," Hansen said. "We would have to radically change our government." Tom Hardy, Bountiful city manager, said eliminating sales tax would amount to an "outright war" on city governments. While cities may disagree among themselves about other proposals — reform of redevelopment agencies or the distribution of sales-tax revenue — they are "totally united in opposing any proposal which eliminates this source of revenue."

Other speakers heavily criticized the task force for what it's not proposing, particularly the failure of a complete removal of the sales tax on food, which has been replaced by a proposed $75 food tax credit for low-income earners.

Multiple speakers, many of them members of the Coalition of Religious Communities, said that the food tax credit does nothing to help those who really need assistance.

"It is not doing anything for a majority of Utah families," said Linda Hilton, executive director of CORC. "It is exclusive, not inclusive."

Although they were in the minority, a few proposals received support, including significant changes to the RDA laws and an expansion of the "circuit breaker" program, which assists senior citizens with their property taxes.

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