Cutting sales tax by one-half cent became the first proposal for reducing taxes to be passed out of a legislative committee this session. But the recommendation by a House committee may signal defeat for the widely publicized effort to remove sales tax from food.
The bill endorsed Wednesday by the House Revenue and Taxation Committee would lower sales taxes on all products, including food, as of July 1. The reduction would cost the state an estimated $70 million annually in lost revenues.The bill's sponsor, Rep. Frank Knowlton, R-Layton, said cutting the sales tax by a half-cent would "keep faith" with taxpayers who were told a half-cent increase to pay for flood damages would be repealed.
Several committee members said Knowlton's bill would be of more benefit to the poor than taking the sales tax off food, since money would be saved on all purchases and food-stamp recipients don't pay the food sales tax.
Advocates for the poor have told the committee that taxing food hurts those with lower incomes the most because they must spend a greater percentage of their income to eat.
"It's natural to have compassion for the poor and hostility toward the rich," Rep. Janette Hales, R-Provo, said, adding that most Utahns fall in between the two categories. "This bill will help everyone."
The sponsor of one of two bills introduced so far to take the sales tax off food, Rep. Pat Nix, R-Orem, said she believes the only hope for the proposal would be that either the Republican or Democratic caucuses take it up.
So far, neither party's leadership has taken a stand on where tax cuts should be made, although removing the sales tax from food has support from both Democrats and Republicans.