State lawmakers postpone contentious tax overhaul bill

In this 2018 file photo, Gov. Gary Herbert speaks at the Washington County GOP Lincoln Day Breakfast, St. George, Utah, Feb. 17, 2018 | Photo by Jeff Richards, St. George News

ST. GEORGE A massive tax overhaul Utah lawmakers hoped to pass this session has been put on hold.

Gov. Gary Herbert and top Republican legislators announced in a press conference Thursday that more time is needed to address issues related to the bill.

“This session we are not going to be moving forward with pursuing the passage of House Bill 441,” House Speaker Brad Wilson, R-Salt Lake City, said.

HB 441 was officially rolled out last week and approved Friday by a House Committee. The near 260-page legislation proposes to lower the state’s income from 4.95 percent to 4.75 and sales tax from 4.7 percent to 3.10 while also “broadening the tax base” by extending sales tax to an expansive list of services.

The push to tax previously untaxed services is due to a general shift from a goods-based economy to a service-based one.

“We know the economy is changing,” Herbert said.

The shift in how Utahns spend their money is causing the state’s general fund, which pays for government services, to shrink. That has led to the state dipping into funds for public education that is funded by income tax revenue, which has continued to rise in contrast to revenue from sales tax.

The move to impose sales taxes on services ranging from haircuts to attorney services has drawn the attention and concern of businesses and industries. Private sector leaders decry what they characterize as paying taxes on top of taxes and the state driving away business rather than promoting it.

Read more: Job killer or money saver? Massive tax bill passes House committee after contentious hearing

HB 411 was originally meant to be heard on the House floor this week, yet was held back and under the process of revision due to rising issues and complexities. One of the revisions did not extend local sales taxes to services.

The governor said the problem of declining tax revenue is one that lawmakers have been aware of for a long while and some are saying now is the time to modernize Utah’s tax system so the state can remain prosperous.

“We stand united in trying to solve the problem,” Senate President Stuart Adams, R-Layton, said.

As the Legislature moves beyond the current session, Wilson said, lawmakers look forward to meeting with people across the state as they work to fine-tune the proposed tax overhaul.

“As we look forward to addressing this problem, we’re going to look to many of you, and industries in this state to help us work through a process to help us move forward,” he said.

Abby Osborne, of the Salt Lake Chamber of Commerce, thanked the Legislature for postponing the bill so the chamber’s members could have more time to digest it. The last week of a 45-day legislative session did not provide enough time, she said.

She added that “tax modernization will continue to be a priority for the Salt Lake Chamber as it has been for the last number of years.”

Chase Thomas, of the Alliance for a Better Utah, issued a statement commending the Legislature for taking more time to consider the issue.

“We commend lawmakers for taking time on this issue and picking tax reform up later this year,” he said. “Whether it’s studied during interim or taken up during a special session, we hope the process allows for sufficient public input, not only by business interests but by the public as well.”

Thomas said that while Alliance for a Batter Utah supports the idea of a tax overhaul, they questioned the necessity of the income tax cut.

“Our children are counting on us to secure a bright future for them, and we can’t do it without adequate funding for K-12 education,” he said.

Prior to the press conference, St. George News reached out to local representatives for their opinions on the bill.

Rep. Walt Brooks, R-Utah, previously told St. George News that he supported the bill.

“Does Utah have a tax revenue problem? No,” he said. “We have a tax problem, not a revenue problem.”

Brooks supports the Legislature’s efforts to get ahead of the issue before the shrinking sales tax base becomes a major problem. He also said he expects Utah residents to actually save on taxes once overhaul is fully implemented.

Rep. Travis Seegmiller, R-St. George, opposes the bill. He told St. George News via a text message Wednesday that he planned to vote against it.

Seegmiller has proposed his tax bill, House Bill 299, and said it would save Utahns up to $200 million.

Other local legislators did not respond to St. George News by the time of publication.

Read more: See all St. George News reports and opinions on Utah Legislature 2019 issues

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Email: mkessler@stgnews.com

Twitter: @MoriKessler

Copyright St. George News, SaintGeorgeUtah.com LLC, 2019, all rights reserved.

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