Chamber opposing plan to toss tax perk

Gov. Gary Herbert's plan to raise $20 million by doing away with a sales tax discount for big businesses was opposed Thursday by the Salt Lake Chamber.

The governor's proposal, part of his $11.3 billion budget unveiled last week, could mean higher prices for Utah consumers and potentially more layoffs, the chamber warned.

"There's no other way to make up the money," Lane Beattie, chamber president and CEO, said in a statement. "Now is the wrong time to disrupt our fragile economy."

Herbert, however, has said continuing to allow businesses to keep a share of the sales taxes they collect amounts to a taxpayer subsidy that's unfair.

The governor said new technology means businesses no longer incur costs in collecting sales tax. "It's outlived its usefulness," he said. "This is good tax policy."

Only businesses that collect more than $50,000 in sales taxes in the previous year now qualify for the discount, set at 1.31 percent of the total sales taxes collected.

Beattie, however, said companies do have to spend money to collect sales taxes, including programming cash registers, training employees, responding to audits and preparing forms.

"In many cases, the state's mandated accounting procedures and audits require the work of full-time employees at the sole expense of the retailer," he said. "It would be wrong for the state to require Utah businesses to collect public revenue without compensating these same businesses for their expenses."

Business leaders are calling for a re-examination of the actual costs associated with the tax collection. If the discount is higher than those costs, the chamber said those revenues should be returned to taxpayers.

But the chamber cited studies that show the reimbursement is lower than the collection costs and said retailers have already suffered through five consecutive quarters of negative sales.

Herbert spokeswoman Angie Welling said the governor "continues to believe the repeal of the sales tax vendor discount is good tax policy that will level the playing field for all Utah businesses. However, he also respects the chamber's duty to represent its members. The benefit of the budget process is that these issues can be presented and subsequently debated in a public forum before any decisions are made."

The governor did not take the chamber's advise to raise some taxes to help balance the budget, instead choosing to come up with a spending plan that had no tax increases.

Beattie is a member of the Governor's Advisory Team, which serves as a sounding board for Herbert.

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