Big tax reforms unlikely for Utah

Utah's tax system has probably never been studied as deeply and seriously as it has been the past three years. But as work winds up this month for a legislative/executive branch task force, only relatively small tax change recommendations appear likely — suggesting no major reforms in sales, property and income taxes.

"It's possible we could not have a recommendation on income taxes — notwithstanding pundits saying it's archaic in structure," says Sen. Curt Bramble, R-Provo, co-chairman of the Tax Reform Task Force. "On income taxes in particular, our predecessors have (shown) some wisdom" in keeping a tax structure where most Utahns pay the same rate — 7 percent — get deductions for charitable giving and home mortgage interest, along with a few other special tax breaks.

Two years ago, a special legislative committee looked at various taxes. Little came of it. Last year, former Gov. Olene Walker put together a group of tax experts who came out with a long list of major tax reforms, including broadening the sales tax base to include services and a choice between a "pure" or modified flat-rate income tax.

Gov. Jon Huntsman Jr. said in running for office last year that the sale tax base must include at least some services. More recently, he proposed a 5 percent flat-rate income tax that gave a credit for charitable deductions but no deductions for home mortgage interest.

The Tax Reform Task Force this year has held dozens of meetings and just finished traveling the state for public hearings. "Thousands and thousands of hours of study has gone into taxes the past three years," said Bramble, a certified public accountant.

Yet the task force has already decided not to expand the sale tax base to services, saying no one wants to place a 6 percent or 7 percent sales tax on medical and health-care bills. And with that sector of the service economy making up 60 percent or more of the currently untaxed base, taxing other services — such as haircuts, lawn care or attorney and accountant fees — doesn't bring in enough money to make the effort worthwhile, tax force members said.

A radical change in statewide sales tax rates — having only one single rate everywhere — is fraught with danger to local government revenues and could also possibly harm zoo, arts and recreational funding (the ZAP tax).

Removing the sales tax from unprepared food is a no-go because it costs way too much.