In a Deseret News report last week on how the state might fund growing needs with limited money, Utah House Speaker Becky Lockhart noted that "We're not a tax increase Legislature."
While that is indeed the state's reputation — one that has helped position Utah as a leading economy emerging from the nationwide economic slowdown, someone needs to send the message to the state Senate. Some powerful people there once again are hoping to remove the sales tax discount from groceries, imposing what would amount to a massive tax hike on every state resident. That would be a bad idea.
Currently, the state's portion of the sales tax charged on groceries is 1.75 percent (local governments also add to the tax shoppers pay). The proposal is to raise this to 4.75 percent, taxing food at the same rate as other items.
Groceries have been taxed at a lower rate since former Gov. Jon Huntsman Jr., signed a decrease into law as a way to provide some relief to the state's poorest residents. While the poor still qualify for food stamps, which are tax exempt, the decrease helped all consumers, reaching senior citizens and others who may have trouble making ends meet but who do not quite qualifying for government aid. The proposal being discussed this year would establish credits low-income people could use to offset some of the extra costs. These could not be redeemed until the end of the tax year. The reasoning for all this is that sales tax revenue has proven too volatile during hard economic times.
But if lawmakers are bent on raising consumption taxes, we wish they instead would focus on gasoline taxes, which are falling far short of what is needed to fund highway construction and maintenance. Two years ago they tried to tie the hands of future lawmakers with a bill requiring the allocation of 30 percent of any growth in sales tax revenue to transportation projects, a measure Gov. Gary Herbert rightly vetoed.
That was the wrong solution, but the problem is real. The state's gas taxes no longer adequately cover the cost of keeping up with drivers and their impacts on roads. Cars are becoming more fuel efficient, and many now run on alternative fuels. The tax increasingly collects a diminishing amount of revenue per mile driven.
In addition, increased driving leads to the choking haze that afflicts the Wasatch Front during temperature inversions. Extracting more money from drivers would naturally lead to a decrease in unnecessary driving.
Finding a viable alternative — an expanded congestion pricing plan or a way to tax drivers per mile rather than per gallon — deserves a great deal of attention. A better funding mechanism would alleviate the need to use so much general fund money to pay for transportation needs. Its impact on the poor would be mitigated by alternatives. Drivers along the Wasatch Front already have an impressive array of viable transportation options from busses and rail, which also reduce the pollution associated with moving about.
There are few reasonable alternatives to buying groceries, however.
Lawmakers who support raising the tax on food would be wrong to think this is not a tax increase. It is an increase of the worst kind — one that hits the poor proportionately harder than others during tough economic times. They might as well support a general increase in the state's portion of the sales tax instead.
Admittedly, lawmakers have a challenge ahead of them trying to fund about $284 million in increased expenses with new growth estimated at only $100 million. If they want to raise new revenue, however, they should distribute the burden more fairly.
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