Utah's gas tax may change

Lawmakers will face conflicting proposals that raise the state gasoline tax and also reduce the sales tax revenue going to transit districts when they open the Legislature next week.

This will be despite record-setting tax revenue this year and the fact that Salt Lake County voters approved a sales tax hike for new transit projects. It's kind of a brake hard, hit the gas, brake hard type of legislating — nothing new for the 104-member Legislature that often tries to accomplish what at first seems to be mutually exclusive ends.

In a pre-legislative conference Thursday, sponsored by the Utah Taxpayers Association, Rep. Wayne Harper, R-West Jordan, said he will sponsor a bill to reduce the current 24.5 cents per-gallon sales tax by nine cents, and then impose a 6.5 percent sales tax on all gasoline purchases.

The price of gas will not initially change with the adjustment, he said. But as gasoline prices rise, people will pay more than under the current system, where it's a simple 24.5 cents on each gallon purchased, regardless of the per-pump price.

Harper said that applying sales tax to purchases of gasoline would help provide a consistent source of revenue for transportation. The gas tax does not increase with inflation, and thus does not provide revenue that sustains with growth, he said.

"Sales tax allows us to respond to inflationary adjustments in the economy," he said.

On Wednesday, the Salt Lake Chamber of Commerce said that it supports an increase in the gas tax to help fund transportation. Charging sales tax to gasoline purchases is also an option to fund transportation, chamber president Lane Beattie said.

But the Taxpayers Association has issues with the idea, said Mike Jerman, vice president of the pro-business group. "Gasoline prices are very volatile, and we've always supported a tax system that relies on a stable revenue source," he said.

Meanwhile, House Speaker Greg Curtis, R-Sandy, says he will push to remove the sales tax on unprepared food from so-called "boutique" taxes, such as the zoo and arts tax, the resort tax, the transit tax and the rural hospital tax.

Removing food from the taxable base will reduce the amount of cash those taxes bring to their specific entities. It could really hit the Utah Transit Authority hard. The agency just received approval from voters to use funds from a new quarter-cent sales tax hike in Salt Lake County to build new transit lines and an extension of commuter rail.