If state lawmakers need easy money, you can be sure the conversation will come around to putting the full state sales tax rate back on food purchases.
No one seems to have invented a wooden stake effective enough to put a final end to that monster. No one seems to have an antidote to whatever potion some lawmakers took years ago that makes them see this tax as the shiny answer to their problems.
It’s not, and even if it was, making groceries more expensive would not be a good governance philosophy. It would hurt poor people. Perhaps, given the programs already in place to help the poorest people afford food, it would hurt the near-poor more than any other group. But that is a significant population whose success or failure affects us all.
And no, giving low-income people a tax credit at the end of the year wouldn’t make everything right.
Utah lawmakers technically ended their 45-day session on Thursday, but the final gavel was more of a pause button. As Gov. Gary Herbert put it to the Deseret News, “we’re kind of going into extra innings.”
This is because the Legislature failed to accomplish its main, stated goal, which was to reform the state’s tax structure to reflect changes in the economy. Technology and spending patterns have eroded sales tax revenues, the main source of money for most non-education-related state expenditures.
The initial idea was to begin taxing a variety of services that currently reside outside the scope of the sales tax. The long list of these include barbershop services, lawn care, Uber rides, attorney services, architectural services, tax preparation and plumbing repair, among many other things.
Once it taxes those things, the thinking went, the state could reduce its overall sales tax rate and still bring in the same amount of money — only in a more sustainable, recession-resistant way. And because the economy is so good right now, lawmakers could go a little farther and offer people a tax cut.
But then timing became an issue. When a bill finally was introduced to do this, less than two weeks remained in the legislative session. Also, the bill had been complicated by proposals for an associated income-tax cut, a 0.075 percent transfer tax on real estate purchases and a 1 percent tax on health insurance premiums.
A variety of people, alarmed that they now might have to collect sales taxes for the first time, or concerned about what all this would do to education, came to the Capitol or called their representatives to complain. The governor and legislative leaders backed away and said they needed more time — they would focus on doing tax reform in a special session, likely in June.
In the meantime, however, reporters learned that Senate leaders had been prepared to draft a bill to restore the tax on food as part of an overall reform package.
Back when Jon Huntsman Jr. was governor, lawmakers reduced the tax on food from the full 4.7 percent state rate to 1.75 percent. Ever since, some lawmakers have seen a restoration of that tax as an easy road to more money.
Two years ago, Senate leaders spend a lot of time touting the benefits of restoring the food tax. When the next recession comes, people might stop buying furniture and cars, but they still would buy food, the thinking went.
But then they got a report from the experts, and it said restoring the food tax would raise only about $175 million per year. That seemed paltry compared to the multibillion-dollar state budget, so they backed off.15 comments on this story
There is little reason to believe the tax would raise more than a paltry sum now, either. But when you consider the state this year is running a $1.1 billion surplus, making the poor and near-poor pay more for food sounds immoral.
And yet, the proposal remains and likely will be considered by the task force lawmakers are assembling to rewrite tax reform before the next election year gets too close.
Yes, state leaders are correct to be concerned about how the changing economy is hurting tax revenues. But grocery taxes aren’t the answer to 21st century tax problems.