Gov. Norm Bangerter opposes any attempt to remove all the state sales tax from food this upcoming legislative session, but could support a partial sales tax reduction on food.
Speaking at his monthly KUED press conference, Bangerter said he hasn't yet decided where a $19 million tax reduction - part of his 1989-90 budget recommendation - should come."Our budget document (not yet printed) will suggest looking at restoring some of the federal deduction (on state income taxes) and at property taxes," the governor said.
However, Bangerter said he's not opposed to reducing the sales tax on food, as long as lawmakers don't get carried away and try to take all the tax off in one year.
Tax Commission experts estimate it would cost state coffers between $60 million and $100 million to remove the 51/8-percent state sales tax from food items. Currently, the sales tax applies to all retail sales except prescription drugs. Bangerter's $19 million tax cut could cut about one-fourth percent from the food sales tax. "That would be a good start," said the governor, "but how well the economy does would determine if we could remove more of the tax later."
There has been some indication that losing the federal deduction on state returns may have a harmful effect on businessmen's decisions whether to locate in Utah, Bangerter said. It's top business management who decides whether to move to Utah and having higher personal state income taxes because their federal tax isn't deductible may cause some to frown on locating here.
The federal deduction was removed from the tax two years ago, and losing it hit high-income Utahns hard. A third of the deduction was restored earlier this year after the income tax ended up bringing in millions more than anticipated.
Bangerter's $19 million in tax relief would allow taxpayers to deduct half of their federal income taxes on state returns.
Speaking on other matters:
-Bangerter said he expects success at freezing property tax rates, even though local government officials fear such a freeze.
-The governor said he won't allow more than $50 million in bonding this year, even though water officials want more money for water projects.
-He won't support a change in state law allowing the Wildlife Board to name wildlife directors. Bangerter fired Wildlife Director Bill Geer last week, much to the dislike of many wildlife and conservation groups, who now want to take such decisions out of the governor's hands.