2 senators seek to hike sales tax on Utah food

Two state senators are now calling for reimposing the state sales tax on unprepared food.

Senate budget chairman Lyle Hillyard, R-Logan, and Sen. Howard Stephenson, R-Draper, president of the Utah Taxpayers Association, in separate statements said it was a mistake when Utah legislators bowed to the "influence" of former Gov. Jon Huntsman Jr. and cut the food tax.

The state sales tax is 4.70 percent. But on unprepared food, it is only 1.75 percent. Cities, counties, local mass transit districts and some other special districts also levy a small sales tax.

Writing in his column for the Utah Taxpayer newsletter, Stephenson said legislators made a "major mistake" when they, over a two-year period, cut the state sales tax on unprepared food.

He said Huntsman pressured lawmakers to cut the food tax to fulfill a promise made in his first campaign.

Stephenson said House members were inappropriately influenced by former Speaker Greg Curtis, who, according to Stephenson, told him that Curtis wanted it to be mentioned in his obituary that he cut the food tax.

"Neither of these reasons should have been sufficient to win passage of the reduced tax on food," Stephenson wrote.

Hillyard told the Cache Valley Daily that if all of the state sales tax was put back on unprepared food, it could raise about $140 million.

"If we were to put that back on, that would help somewhat the $900 million to $1 billion shortfall" that Utah legislators could see in next year's budget when they come into general session in two months.

Both Hillyard and Stephenson want to provide an income tax credit to low-income Utahns to offset what they would pay in higher state sales tax, if the sales tax on food were restored.

Hillyard suggests that the difference, around $116 million, could go to offsetting the state's estimated $800 billion budget shortfall next year. Stephenson says the difference should go to general tax relief � with accompanying tax rate cuts in personal and/or corporate taxes � so taxes would not go up.

For more than a year, Rep. Kay McIff, R-Richfield, has been trying to get lawmakers to put the tax back on food and, through other means, give tax cuts to low-income Utahns.

McIff says the food tax cut really didn't help low-income Utahns that much, but instead went to large Utah families or more well-to-do Utahns who buy a lot of food — people who likely really don't need that kind of a tax cut.

The Utah Tax Review Commission has been looking at the ins and outs of re-applying the full tax rate on food since the beginning of its interim work this spring and will likely recommend support of the idea this week. In a draft letter scheduled to be reviewed Thursday, the commission suggests reinstating the tax as part of a strategy to solidify the flow of tax revenues.

"We specifically recommend that the Legislature restore the sales tax on food to the general sales tax rate imposed on most other purchases," the commission letter states. "The TRC believes that this action to fully restore food to the sales tax base will improve the stability of the sales tax."

Though the Legislature could make reinstating the food tax revenue neutral by lowering the general rate, the office of the Legislative Fiscal Analyst estimates the change would generate some $144 million in additional general fund revenue in fiscal 2010.

e-mail: bbjr@desnes.com, araymond@desnews.com