One of the conservative leaders of the Utah House, Rep. Frank Knowlton, wants to cut sales tax by $65 million, but he says his tax cut will be just one of a dozen or so lawmakers will haggle over this upcoming session.
Knowlton, R-Layton, is the outgoing co-chairman of the powerful Executive Appropriations Committee, which sets the state's budget, and will be the new chairman of the House Revenue and Taxation Committee when lawmakers meet in general session Jan. 9.He has prefiled HB36, a bill that would reduce the state sales tax by half a percentage point to 4.5 percent.
Such a cut would cost the state about $65 million in sales tax revenue, Knowlton said.
Gov. Norm Bangerter wants to give a $19 million tax cut next year. As yet, he doesn't recommend which tax or taxes should be reduced by that amount. With that recommendation, Bangerter is saying that only $19 million can be spared and that the rest of the estimated growth in state revenues must go for new students in schools, more people on welfare and other state needs.
"I believe ($65 million) is a reachable amount," said Knowlton. "We can get there through tighter budgeting, adding in current and anticipated surpluses and, I think, achieve greater revenue growth than predicted."
Knowlton was one of many conservative Republicans who had to grit their teeth when they voted for Bangerter's huge tax increase in 1987. When the state income tax brought in $80 million more than anticipated that year, legislators - at Bangerter's insistence - gave a $77 million rebate and cut rates by 11.5 percent.
"We raised the income and sales taxes (in 1987). We've reduced the income tax when that brought in too much money. Now the sales tax is bringing in more than we anticipated. It's time to reduce the sales tax," said Knowlton. "We took money (from citizens) through those taxes when it was necessary. Now times are better economically, and we should give some of the money back."
Knowlton fears that Utah's sales tax, one of the highest in the nation, is harming economic growth.
"When we went from 5 percent (state and local sales tax) to 6 percent, you could just see the increase in catalog sales. We're losing $10 million to $20 million a year (in sales tax) to catalog sales and its just getting worse."
A high sales tax also drives Utahns into other states to make big-ticket purchases, like cars and major household appliances, he believes.
Because the sales tax is so high, each year lawmakers see more proposals to exempt this or that business from the tax. "A sales tax exemption means you make 6 percent more profit, just like that. That's a lot of money to most businesses."
Already Sen. Lyle Hillyard, R-Logan, has prefiled a bill that would exempt the sales tax on ski lift passes. Knowlton tried to kill all sales tax exemptions several years ago. His bill passed the House but died in the Senate.