Food tax issue spills over into tax reform

The squabble between Republicans in the Utah House and Senate over how to deal with the much-hated sales tax on food will apparently now move into income tax reform, as well.

Thursday, Sen. Curt Bramble, R-Provo, said he will introduce an income tax reform bill different from the so-called H3 plan developed by Rep. John Dougall, R-Highland, and economists for Gov. Jon Huntsman Jr.

Meanwhile, Dougall says his bill is about ready to be formally introduced and debated.

And as part of that debate on H3, the computer-model site on Huntsman's home page is being updated so that any Utahn can visit the site, type in a few income/family bits of information and then have his new state personal income tax under H3 be figured for him.

"My bill is the governor's plan — and we are finalizing that," Dougall said.

Part of Dougall's omnibus bill will also be removal of the sales tax on unprepared food at the cash register.

By combining both income tax reform — which will include around a $17 million tax cut — with removal of the sales tax from food — a $166 million tax cut — Dougall's bill will result in an overall tax cut to most Utahns.

Bramble's new income tax proposal will not include a removal of the food tax at the cash register. Instead, he will give a healthy earned income tax credit — "you can call it a credit for food tax (paid) if you want."

But while the amount credited to most Utahns would, in fact, total as much or more than they pay in food tax each year, it is not directly tied to those numbers, Bramble says.

GOP senators are not yet ready to buy into the $166 million food tax cut.

House Republicans have already voted in caucus for a $230 million tax cut next year.

Republican senators were slower to react to the $1 billion in extra money coming into Utah coffers. Last week, they voted in caucus for a $100 million tax cut.

In December, in his recommended budget Huntsman suggested a $60 million tax cut next year.

While not making a firm promise, Senate President John Valentine, R-Orem, says if mid-February state revenue updates for fiscal 2006-07 come in $80 million to $90 million more, GOP senators may be willing to come off of their opposition to repealing the food tax at the register.