Advocates for poor wary of restoring food tax

SALT LAKE CITY — Food is one of Lou Anne Stevenson's biggest expenses.

The 56-year-old Salt Lake City woman lives on Social Security and other government assistance totaling about $1,020 monthly, about $300 of which goes for groceries.

"I'm not living extravagantly," said Stevenson, who is on a special diet due to hypoglycemia and other health issues.

Stevenson isn't sure how she would deal with a hike in the sales tax on food, a proposal currently being considered by the Utah Legislature.

"I have a hard enough time just trying to keep food on the table as it is," she said, adding that weather patterns and food shortages continue to drive prices up. "I don't know how we're going to survive, and they want to more than double the tax on food on top of it."

Raising the sales tax on food surfaces in the Legislature every few years. It typically pits advocacy groups for low-income Utahns against lawmakers, and lawmakers against each other. The Senate has been amenable the idea, while it has met resistance in the House.

The proposal this year has a twist that sets it apart from ones in the past: A tax credit and a tax refund to offset the tax hike.

Linda Hilton, Crossroads Urban Center outreach coordinator, had a succinct answer to raising the food tax: No.

"What was offered was 'Let's Make a Deal,' and we don't play 'Let's Make a Deal.' That's what makes this year different," Hilton said. "We aren't going to make a deal."

Utah is among seven states nationwide that tax groceries at a lower rate than other goods, while two states apply general sales tax rate to food. Five states tax food but offer credits or rebates to offset the tax. The remaining states exempt most or all food purchases from sales tax.

Sen. John Valentine, R-Orem, said he wants to see the state sales tax restored on food purchases to stabilize often-volatile tax collections without hurting the Utahns who most benefit from paying less at the grocery store.

"My whole goal is to try to bring some stability to the state of Utah and to give back to some of our lowest-income people a little more than they're getting now," Valentine said, promising any changes would be revenue neutral.

His initial draft boosts the state sales tax on food from 1.75 percent back to the same 4.7 percent state rate paid on other purchases. Then-Gov. Jon Huntsman Jr. was behind the reduction, made over 2006 and 2007.

The proposal would also provide an $80 annual refundable food tax credit to each member of a family earning less than $35,000 a year, or $40 each for families earning between $35,000 and $60,000.

In addition, it would allow families that qualify for the federal Earned Income Tax Credit to get a check for an amount equal to 5 percent of the federal credit from the state.

Valentine, a tax attorney, said the average Utahn spends $80 a year on food taxes. Under his proposal, a single mother with one child earning less than $35,000 would receive a total of $314 back — $154 more than they would likely pay in food taxes.

While there has long been talk of rolling back the sales tax cut, Valentine said this might be a good time to try again. More lawmakers, he suggested, may be regretting losing a reliable source of revenue after the economic downturn.

Plus, 2013 is not an election year.

"It's going to be easier to look at it because the political storms aren't nearly as intense as they would be right before an election," the former state Senate president said.

But House Speaker Becky Lockhart is dead set against tampering with the food tax and believes most House Republicans are, too.