From Deseret News archives:

Utah lawmakers consider axing food sales tax

Many talked about it, but legislators finally put forth plan

Published: Wednesday, Nov. 2, 2005 11:22 p.m. MST
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In the 1990s there was a bipartisan effort by leading Democratic and Republican state senators to phase out the state's portion of the sales tax, but their bills always died.

House GOP leaders' are concerned about the new proposal as well. First, one of the goals of the task force is to expand the tax bases of two of the states' major tax revenue sources — income and sales tax.

But task force members have already rejected recommendations by both Huntsman and former Gov. Olene Walker that the state sales tax be expanded to services such as haircuts, lawn care, attorney and account fees.

Also, removing unprepared food from the sales tax base does the opposite of expanding it. "It does shrink the base," Urquhart said. But the benefits of relieving low-and-middle income Utahns' tax burdens outweighs that concern, he added.

Stimulating the economy is also a goal, which the task force and Huntsman propose achieving through tax cuts/breaks to specifically help grow local businesses attract ones from out of state.

Higher nonfood sales tax rates may discourage some business activities. But it could also shift some of the tax burden from Utah residents — who often prepare their own food — to tourists and conventioneers more likely to eat at restaurants that would pay the higher sales tax rates.

Finally, Wednesday it was announced that Huntsman has decided to officially support a "modification" to his original income tax reform proposal.

Task force members and legislative staffers have put together tax revenue estimates for 2007. And with those new numbers, Huntsman's 5 percent flat-rate tax, which already included a credit for charitable giving, can also include a credit for mortgage home interest. In addition, Huntsman's original idea of limiting personal exemptions to five per family (most often a dad, mom and three kids) can be junked. There would be no limit on personal exemptions.

Huntsman's new Plan B, an Urquhart/Curtis income tax Plan C to just cut $44 million in income taxes by lowering the rates in the current system, and Rep. John Dougall's Plan D of a 4 percent flat-rate tax with additional breaks for low-income Utahns, will be debated at next week's task force meeting, committee members decided.

How those three plans could affect your families' state income tax can be found at the Legislature's Web site: www.le.state.ut.us. Click on "task forces," pick the Tax Reform Task Force and click on the latest meetings' "related materials."


E-mail: bbjr@desnews.com; jloftin@desnews.com

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