Tax-reform session planned

The day after the 2006 Legislature ended in a deadlock over income tax reform, Gov. Jon Huntsman Jr. said he'll bring lawmakers back this spring to try again to pass the final piece of a $160 million tax-cut package.

"The session will be to complete the deal," Huntsman told reporters Thursday, promising he'll call a special session of the Legislature no later than May 17 and limit the issues on the agenda to pretty much just the tax cut.

House members were arguing about the compromise income tax reform plan late into the night Wednesday, finally giving up and putting the bill on hold about a half-hour before the mandatory midnight adjournment.

"We're not ready to make this major leap," House Majority Whip Steve Urquhart, R-St. George, said during the House debate. "If we want to cut taxes, we have a pretty good system right now."

But the GOP governor wasn't ready Thursday to say he'd even consider an alternative to his $70 million tax-reform plan that would slice the current top rate of 7 percent paid by most taxpayers to just below 5 percent while limiting or eliminating deductions and exemptions.

Huntsman blamed a lack of understanding for the House's inaction and said he'd be working to educate members between now and the special session. The governor also acknowledged the complexity of the plan.

Besides, he said, some states have taken a decade to pass tax reform. "This is relatively complex tax reform. We're trying to do it in a year. I think we'll actually achieve that," he said. "So this isn't anything that's considered easy."

Just last Friday, however, the governor stood by House and Senate leaders and announced a compromise on tax cuts had been reached that included the income tax as well as shaving 2 percentage points off the state's 4.75 percent share of the sales tax on food.

Also part of the deal were $20 million in business tax cuts supported by the Senate. Those cuts, labeled economic development incentives, did pass, and so did the reduction in the sales tax on food.

Both Huntsman and House Speaker Greg Curtis, R-Sandy, had pushed hard to get the sales tax off food, something the Senate GOP steadfastly opposed until the compromise was announced.

The House majority had balked at tax reform, with a number of Republicans saying the same thing as Urquhart — a straight tax cut would be preferable to tax reform, which would actually raise taxes for some Utahns.

That had been a problem in the Senate, too, until members massaged the proposal to eliminate most of the so-called "losers" in tax reform. Senate President John Valentine, R-Orem, said Thursday his "challenge will be holding the caucus together."