SALT LAKE CITY (KUTV) — A bill to establish a task force to study ways to revamp Utah’s tax code moved to the Senate after passing the House Tuesday evening.
Twenty lawmakers, 10 from each chamber, will make up the group that will look at how best to combat declining sales tax revenue over the coming months.
One of the ideas proposed by top Republican senators is to institute a higher sales tax on unprepared food. The state rate on groceries is currently 1.75 percent. Bumping the rate to 4.7 percent, which is the tax rate on everything from computers to clothes, would bring in an additional $227 million annually, according to state fiscal analysts.
Senate Majority Whip Daniel Hemmert, R-Orem, said hiking the grocery tax would raise the same amount of revenue as House Bill 441, the proposal put on hold last week that would have taxed a wide range of services from haircuts to health insurance premiums and legal fees.
“If you’re looking at that solution, which was an expansion of the base into untaxed services, you should be looking at all solutions,” Hemmert said, “and a sales tax on food is another solution.”
Sen. Karen Mayne of West Valley City, who leads the Democrats, said her party doesn’t support a tax on food.
“We need to eat,” Mayne said. “It’s something we need to live, and so we don’t tax that.”
Senate President Stuart Adams, R-Layton, said a grocery tax hike could be paired with an income tax credit to alleviate any burden on low-income Utahns.
“Most people in this room probably wouldn’t qualify for that grocery tax credit,” Adams said to a group of journalists and legislators, “but we would pay our sales tax on food, and so would the tourists. So would those that are very, very, very wealthy, and then we take that money and target those groups that need that help.”
Hemmert said the task force will present recommendations to the Legislature by August. Lawmakers could then pursue the special session that Gov. Gary Herbert and legislative leaders referenced last week or wait until 2020.
Sen. Mayne said the state has “tons of ideas” to consider.
“We give a lot of tax incentives,” she said. “Maybe we should look at those, pull back on those.”
“We need to go slow,” Mayne added. “What services work? Where are we comfortable?”
In January, House Speaker Brad Wilson and Gov. Gary Herbert pledged a tax cut of $225 million as part of the tax reform plan.
The consensus has been to broaden the tax base — by taxing never-before-taxed services, for example — and then lower the overall sales tax rate. HB 441 also included a reduction in the income tax rate.