From Deseret News archives:

Food tax on front burner

Utah GOP leaders wrangle over how to remove most-hated tax

Published: Monday, Nov. 7, 2005 11:47 p.m. MST
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But Urquhart said such complaints are minor compared to the overall issue: Getting rid of the most-hated and regressive tax in the state.

"Thirty-four other states (with sales taxes) don't tax unprepared food," Urquhart said. "Utah is one of only six states that do. If we have the political will, we can figure out" how to make the food tax repeal work.

Gov. Jon Huntsman Jr. ran last year on a campaign platform that included removing the sales tax from food and repealing the current 5 percent corporate income tax.

Huntsman never had a specific proposal on removing the food tax, saying the task force should take a serious look at it. His corporate income tax repeal died in the 2005 Legislature, and now the tax force is looking at what members say are better ways to stimulate economic development and give targeted business-tax breaks.

For much of the spring, summer and fall, the tax force has talked about giving low-income Utahns a $75-per-person refundable credit on their income taxes as a way to give them a break on food taxes they pay.

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But even advocates for low-income Utahns say many of the poor currently don't pay any income taxes and so don't file returns. And while legislative fiscal analysts say the $75 food tax credit could give $50 million in tax relief, agencies and advocates working with the poor say fewer than half who qualify would bother filling out a tax return to receive it.

However, removing the sales tax from food for everyone gives a $44 million tax cut under the Curtis/Urquhart plan, said Rep. Merlynn Newbold, R-South Jordan. "It treats everyone the same. And (the sales tax) comes from the general fund, not the uniform school fund" and so would not harm public and higher education funding — always a legislative priority.

But Bramble seemed unconvinced, pointing out that the general fund is where state government matches federal Medicaid dollars. What sense does it make to give the poor a sales tax cut if it harms one of the most important programs for the poor? he said.

He added that food stamp participants don't pay sales tax on food stamp purchases now, and if the basic sales tax rate on non-food items goes from 5.25 percent to 6.35 percent (the Curtis/Urquhart off-set to keep the state from losing $225 million), "the sales tax becomes more regressive because they pay more on other (retail) items."

Linda Hilton, executive director of the Coalition of Religious Communities said, however, that food stamp recipients never get enough food stamps to cover their real cost of the unprepared food they buy — and so would be much better off if the food tax is removed.

For example, she said, a senior citizen widow whose only income is Social Security at $590 a month qualifies for only $9 in food stamps. And no one believes that senior could live on $9 in food a month — "so they pay sales tax on the great majority of food they buy."

The Curtis/Urquhart plan "would reduce their sales tax," she said.

Of course, if the 2006 Legislature had the "political will" to cut the food tax and not raise the tax on non-food items — Valentine's motion that was not acted upon — then the $225 million tax cut to all Utahns "is the best" of alternatives, Urquhart said after the task force meeting.

"We in the House would take that in a second," he added.


E-mail: bbjr@desnews.com

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