Utahns won't get tax decrease — and may see a rise in sales levy

Not only will there be no general tax cut this session, it now looks like lawmakers may hike state sales taxes before the 2008 Legislature adjourns next Wednesday.

Both House and Senate Republicans are backing a 0.05 percent sales tax increase to fix congested highways, a proposal they insisted Thursday was actually a tax shift.

The increase would boost the state sales tax rate to 4.7 percent but would not be applied to food purchases. It is expected to raise some $20 million for transportation projects aimed at relieving "choke points," primarily on state roads where small road fixes could make a big difference in congestion problems.

While all Utahns would pay more in sales taxes, leaders of the Legislature's Republican majority said the extra revenue raised would, in effect, be offset by more than $20 million in tax cuts for targeted groups.

The biggest tax break, $18 million, would go to the 70,000 or so self-employed Utahns who buy their own health insurance. Another $250,000 in tax credits would be available to Utahns who build solar energy projects, while Delta Air Lines would be the chief beneficiary of a $50,000 tax break.

Gov. Jon Huntsman Jr. has not signed off on the proposal, his spokeswoman, Lisa Roskelley, said Thursday.

"The governor is definitely concerned about transportation funding and he's going to look at the logistics of any option," she said. Earlier in the day, Huntsman told the Deseret Morning News he "would be against a net tax increase" but not what he called "re-balancing" taxes.

"It's really rather straightforward," said House Speaker Greg Curtis, R-Sandy. "Philosophically I can look at it and say I made a philosophical decision that it's not a tax increase. It's a tax shift."

Other options for transportation funding are available, including a reduction on other state programs. However, most other programs, such as education, are also not getting the type of money they anticipated at the beginning of the session.

Senate President John Valentine, R-Orem, also called the proposal "a tax shift — a very, very small increase" that amounted to "pennies" that would go a long way toward easing traffic congestion throughout the state.

It's an election year for all of the House and half of the Senate. Earlier in the session, GOP lawmakers had talked about giving Utahns a $100 million property tax cut. But ever since the latest revenue estimates fell short, the search has been on for money, especially for transportation and education.