ST. GEORGE — Tax Restructuring and Equalization Task Force members are set to meet Thursday evening to discuss a number of possible solutions to Utah legislators’ concerns over what they believe is a narrowing sales tax base.
The committee recently ended its eight-stop listening tour at Utah Valley University before taking a two-week hiatus. Members reunited Aug. 14 to start the conversation about possible changes to the current tax structure that would be designed to widen the sales tax base.
During the meeting, the task force touched on the topics of creating additional tax credits, lowering tax rates and taxing food. They’ve also assessed the practicalities behind a number of options, including the possible repercussions of restoring a general sales tax on all food or select foods, such as soda, candy, bottled water and dietary supplements.
Restoring taxes on all food could increase Utah’s tax revenue by about $250 million, according to the Policy Options Presentation. Due to the regressive nature of a food tax, members have also begun to look at several ways to offset the impact on residents.
Task force member Rep. Tim Quinn, R-District 54, says he does not support restoring sales tax on food.
While it is a relatively easy solution, Quinn argued taxing food disproportionately affects lower income families and elderly taxpayers who are on fixed incomes. Despite a possible tax credit to lessen the impact on low income households, he said there are better options.
“It doesn’t move the needle, it’s just a one-time fix,” Quinn asserted.
A tax on food creates a large cushion in the state general fund in the near term. However, according to Quinn, it doesn’t protect Utah’s sales tax base from the fluctuating economy.
As a part of the committee’s study phase, the task force will meet for its second of four public meetings to continue to discuss potential legislative options. The agenda is currently set to discuss four proposals made during the listening tour.
Members will begin looking into the effect of modifying state government spending and the structure of education funding. Amending the state constitution to remove the education revenue silo and exploring alternative sources of funding, or funding mechanisms for education, are also on the table.
According to Quinn, he has pushed his colleagues to look at government spending more carefully since the beginning of his term.
“We do a great job as a Legislature, as a state, and have for many, many years,” he said. “It doesn’t mean we can’t do better, or we can’t tighten our belt.”
Quinn said he wants to see the revenue silos dissolved and necessary expenditures, such as education, guaranteed a base percentage of government funds.
“If we could look at taxes in a holistic way… and not worry about where the money is coming from … I think we would do a better job and serve the citizens better with our tax policy.”
Despite public outcry against HB 441, a bill presented in the spring that proposed a tax on most services, Quinn argued that would be the best way to reform Utah’s tax structure to meet the needs of modern taxpayers.
Quinn said he thinks the task force should look to taxable, service-oriented businesses in a “smart and measured way” to write legislation that would be least detrimental to taxpayers, businesses and the state while avoiding tax pyramids, where taxes are imposed on already-taxed items.
“Until we do, this problem is going to continue to rear its head every decade or so because that gap between goods and services is going to continue to widen over time,” he said.
Consumption, he asserted, shouldn’t be “segregated between goods and services.” By taxing services, Quinn said other taxes – like income and property taxes – could eventually be reduced.
At the beginning of this process, Quinn said everything was on the table in a lot of people’s minds. However, since the end of the listening tour, 10-12 solutions have risen to the top and will be discussed during the last three public meetings.
The committee toured Utah to speak with taxpayers about their concerns and hear their ideas for tax reform. Following the end of the listening tour, the task force returned to the capitol with agendas based off of the public comment.
The task force will hold an open meeting in room 30 of the House building in Salt Lake City Thursday at 4 p.m.
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