SALT LAKE CITY — As Utah lawmakers get ready to consider scaling back some of the state's 90 sales tax exemptions, a report estimates that the state missed out on about $426 million in the last budget year due to tax exemptions that range from aviation fuel to college text books.
Republican Gov. Gary Herbert had urged lawmakers to scrutinize tax policies during the recently completed legislative session in hopes of freeing up some money for education and other spending needs. Although lawmakers considered several changes, they backed away in the session's final days before any bill made it through the Legislature.
They're expected to spend some time this summer studying the state's exemptions and many other aspects of its tax policy.
Exemptions can be extremely valuable tools to spur the state's economic growth, said Billy Hesterman, vice president of Utah Taxpayers Association, a nonprofit taxpayer watchdog group.
Hesterman gave the example of Utah's exemption for tools or machines used by a company to create a product. When a car manufacturer doesn't have to pay sales tax on the wrench he used to build a car, or a farmer doesn't have to pay the tax on seed corn, they have more money to hire employees and can ultimately produce more cars and food, he said.
But Hesterman said it is important to watch out for exemptions that were put in place for the wrong reasons. It's worth re-evaluating any exemptions "given because politicians want to make friends with people or they want to make certain industries happy with them or they feel like certain industries deserve a break."
Sen. Jim Dabakis, D-Salt Lake City, said exemptions are not fair to individual taxpayers and business competitors that aren't offered the same benefit.
"It's just the normal hardworking Utahn that just pays his taxes that loses out, and our schoolchildren because they're not getting the money they deserve," Dabakis said.
Utah also includes exemptions for charitable services, such as school and fundraising sales and food stamps, and for medical services, such as prescription drugs and home medical equipment.
Some exemption amounts were not included in the report because there was not enough reliable data.
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Utah sales tax exemptions
Here are some Utah sales tax exemptions and the estimated amount of money the state missed out on in the last budget year because of them:
• Aviation fuel — $12 million
• Sales of hay — $9.2 million
• Short-term lodging consumables — $2.1 million
• Newspaper sales or subscriptions — $2.4 million
• Admissions to college athletic events — $2.3 million
• Vending machine sales — $2.1 million
• Coin-operated amusement devices — $1.5 million
• Ski resort equipment — $449,000
• Airline food — $306,000