SALT LAKE CITY — Utah might be one step closer to its own gold standard after the Senate approved a bill Thursday that would require the state to recognize gold and silver coins as legal tender.
“Our hope is to help stabilize the currency within our own state long term,” said Senate Majority Leader Scott Jenkins, R-Plain City.
HB317, passing 17-7, makes the exchange of federally issued gold and silver coins an option for businesses and individuals, though it does not mandate it. The bill also requires gold and silver coins to be valued at their current market value.
The Senate approved sending the measure to the Tax Review Commission and Revenue and Taxation Interim Committee to study establishing an alternative currency system backed by silver and gold.
But some lawmakers are skeptical of what the measure, which has passed the House and now moves to Gov. Gary Herbert for his action, implies.
“We had better be careful before we fully embrace this,” said Sen. John Valentine, R-Orem. The bill is not a “get-out-of-jail-free card” when it comes to federal regulation, he said.
Gold and silver users would have to file federally required transaction reports, Jenkins said.
Sen. Ross Romero, D-Salt Lake, said the bill, which exempts gold and silver from the capital gains tax by providing a tax credit, creates a false incentive to invest in them. The state, he said, shouldn’t have a policy encouraging coin investing.
“We’re artificially creating an incentive for this investment vehicle over others.”
Sen. Ben McAdams, D-Salt Lake, joked Wednesday night during preliminary discussion that the state should also make salt a legal form of tender, since Utah has such an abundance.
"I hope we also revive salt as a form of currency, too!" he tweeted during the debate.
Legislative fiscal analysts have estimated the bill would reduce the state's income tax revenue, which funds public education, by $250,000 in 2012 and $550,000 per year beginning in 2013.
But House sponsor Brad Galvez, R-West Haven, has said the state would see an increase in sales-tax revenue as the value of gold rises.
Contributing: Dennis Romboy