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Food tax hike, income tax cut and other big changes in Utah’s tax overhaul bill

Posted at 11:06 AM, Nov 07, 2019
and last updated 2019-11-07 17:01:34-05

SALT LAKE CITY — The Utah State Legislature’s tax reform task force has unveiled its bill that would cut income taxes, raise food taxes and tax some services.

The bill, released hours ahead of a scheduled hearing on Thursday to discuss it, would increase sales tax revenue in Utah by $570 million and decrease the income tax by $650 million. Here’s some of the highlights:

  • The state income tax rate is dropped to 4.58%.
  • The corporate income tax rate is also decreased.
  • A family of four in Utah making about $60,000 would see an income tax cut of about $320 a year.
  • User fees for transportation is proposed.
  • The food tax is raised to the full sales tax rate, but grocery tax credits are offered for lower-income people.
  • Feminine hygiene products would no longer be taxed.
  • A Social Security income tax credit is created.
  • A state-level earned income tax credit is created.
  • Some tax exemptions are repealed like electricity for ski lifts, newspaper subscriptions, college athletic event admissions, textbooks, vending machine purchases, etc.
  • A sales tax on services will be implemented for things like streaming media, ride sharing, landscaping, cleaning, shipping and handling on goods purchases, tourism, pet boarding, etc. It would be applied to consumers and end-users.
  • Rental car tax increases.
  • The earmark on liquor sales covering school lunches for needy children is repealed.
  • The earmark for education in the income tax would be removed, something that would require a constitutional amendment and voter approval.

Lawmakers have pushed for a tax overhaul, arguing that a decline in revenues hurts the ability to pay for essential government services like roads, schools and healthcare. But previous attempts to overhaul the tax code have failed in the face of public pushback, mostly over the sales tax on services. Lawmakers were forced to pull back a bill earlier this year.

Legislative leadership has pushed for a special session in December to pass this bill. Public hearings are scheduled Thursday and on Nov. 21.

In a statement to FOX 13, House Speaker Brad Wilson, R-Kaysville, signaled his support for the bill.

“The tax reform proposal released today helps Utahns in several ways. It gives money back to Utah families through an $80 million tax cut; it ensures we can keep paying for important things like education, roads, and health care; and it preserves our outstanding quality of life and puts us on a path to successfully managing our state’s extraordinary growth,” he said.

“I’m grateful for the hard work of the Tax Restructuring and Equalization Task Force members, who have put forward a fair and balanced proposal. We look forward to people reading it, understanding it, and sharing their feedback.”

Social welfare groups, including the Catholic Diocese of Salt Lake City, have complained the hike on the food tax will significantly harm Utah’s poor. They have urged members of the public to call lawmakers to demand it be repealed.

“The Diocese of Salt Lake City will continue to advocate for a tax structure that prioritizes the most vulnerable. Raising the sales tax on food and requiring individuals who are already vulnerable to wait a year for a refund harms those in poverty. We also have concerns about the message the state is sending by carving out family members who are incarcerated,” said Jean Hill, of the Diocese’s Office of Life, Justice and Peace.

Governor Gary Herbert has signaled his support for a special session, if agreement can be reached on the bill.

“We appreciate the hard work of the legislative task force in putting this bill together. The governor looks forward to reviewing their recommendations and working with legislative leaders toward passage of a bill,” governor’s spokeswoman Anna Lehnardt told FOX 13.

Read a summary of the bill here: 

Read the bill here: