Reinstating the food tax is a must to fill in Utah's budget gap

Good tax policy requires broadening the base, narrowing the exemptions, enhancing revenue stability and increasing simplicity of application and collection. We violated all of these objectives two years ago when we cut the food tax in half and adopted a two-tiered rate with complex distinctions and reduced stability.

The Retail Merchants recently told the Tax Review Commission that they oppose any change other than complete elimination or full reinstatement. They rightly want out of any game in which this tax is a "political football."

The two-year-old promise of elimination was impractical and doomed from the start. Local governments, especially in rural Utah, are highly dependent upon the food tax. Take it away from the cities and towns, and their only alternative would be crippling increases in property taxes.

The food tax is the most universally shared tax. Its sweep not only includes permanent residents, but transients, undocumented persons and the traveling public. It recognizes in a simple and direct way the valuable lesson taught by "The Little Red Hen." All who share the benefits should contribute something — even if it's modest.

For the truly disadvantaged and low income, we can target relief without giving up this stable source of revenue. Such relief will cost $20 million of the $156 million the reinstated rate will produce. But the net $136 million will also greatly benefit the less affluent.

It's no accident that support for the full tax on food is coming from groups that advocate for the needy such as United Way and Voices for Utah Children. They correctly perceive that a healthy state government is crucial to the causes they advance.

Two examples will make the point: We currently face a $50 million shortage in state Medicaid funds. If we were to commit $40 million of new food tax revenue toward this shortage, the feds would match it 2 for 1. Our $40 million would become $120 million in the hands of the needy.

Second example: We have experienced a rush of new students at our colleges and universities. The increases range from 4 percent to 24 percent and consist largely of those who have lost their jobs or recognize the need for additional and/or different training. The state needs to reward their personal initiative and boot-strapping, but that can't realistically happen on the additional, and potentially devastating, 17 percent cut currently proposed for higher education.