Tax cut possible: Lawmakers hope to provide election-year relief

Never underestimate the political pressure to give a tax cut, especially in an election year.

Wednesday, Utah's part-time legislators talked about a September special session where they would somehow give residents a $70 million personal income tax cut in 2006.

"We will dedicate our whole (July) interim meeting to the dual tax system" and see if problems with tax-cut estimates can't be worked out," said Sen. Curt Bramble, R-Provo, co-chairman of the Legislature's Revenue and Taxation Interim Study Committee.

Gov. Jon Huntsman Jr. is glad legislators are seriously talking about "the dual tax system reform," his spokesman, Mike Mower, said.

"We are open to considering the best way to facilitate its passage," Mower added, which could include a fall special session.

Senate President John Valentine, R-Orem, said he too is willing to talk. "But I won't favor calling a special session unless two things are clear: We have certain, verifiable numbers on what the change in the tax system would cost us, and I have 15 votes (a Senate majority) for the change in my (GOP) caucus."

Senate Republicans discussed the tax cut in a Wednesday closed caucus, but no decisions were made, Valentine added.

The renewed interest in a tax cut — coming as it does when all 75 House members and half of the 29-member Senate face voters in November — arises as a new Tax Commission report shows the state has $200 million to $300 million in tax revenue surplus this current fiscal year, which ends June 30.

Those are not record numbers, but they are very healthy surpluses. That money is not needed for this year's tax cuts — $160 million for those has already been set aside by the Legislature.

While the Utah House stood with Huntsman on a number of thorny issues during the 2006 general session, House GOP members may not be able to deliver the votes asked for Huntsman's so-called "personal income tax reform."

"I have some problems with the dual tax system," House Speaker Greg Curtis, R-Sandy, said Wednesday.

For two years the governor has been advocating a "fairer-flatter" personal income ttax system, one that dumps a number of traditional tax deductions or exemptions but also would lower the current top income tax rate from 7 percent to around 5 percent.

However, that so-called H3 reform is now out the window with the dual tax system, Curtis, Valentine and other legislators said Wednesday.