ST. GEORGE — Following months of conversation and study, the Utah Legislature’s Tax Restructuring and Equalization Task Force has begun the recommendation phase of their six-pronged tax reform process.
During the committee’s first of three recommendation phase meetings on Oct. 22, the task force discussed six proposals and passed a number of motions to begin the process of drafting a bill that will later be presented to the state’s Senate and House of Representatives.
Task force co-chairs Sen. Lyle Hillyard, R-District 25, and Rep. Francis Gibson, R-District 65, presented a policy proposal during the first meeting, which included income tax reductions, sales tax expansion and other revenue-neutral shifts.
Reductions of income tax would include decreasing income tax rates, expanding the “Utah Dependent Exemption” for taxpayers’ tax credit, creating an income tax credit for Social Security retirement incomes and creating a “grocery tax credit” for low-to-middle income residents.
At the same time, the proposal seeks to expand the sales tax base by restoring full sales tax on unprepared food and repealing specific sales tax exemptions — including sales tax exemptions for motor and special fuels — while reducing sales tax earmarks for transportation and charging sales tax on certain services. The proposal also included increasing the state Motor Vehicle Rental Tax and switching to direct user fees for transportation costs.
Revenue-neutral shifts included finding alternative, stable, funding for education, removing state constitution’s earmark on income tax, and funding school lunch programs using the education fund instead of the liquor mark-up funds, moving revenue produced from higher liquor prices to the general fund.
“One of the key drivers in this is to cut the income tax rate,” Hillyard said. “Now, I’ve seen some people say, ‘every income tax is a cut to public education.’ That would be true if that’s the only money public education got is the income tax.”
At the end of the meeting, four motions — outside of the motion to adjourn — were made and approved, with two of them receiving substitute motions. Hillyard moved that the task force would write a bill based on his and Gibson’s proposal.
A substitute motion included taking the chair’s proposal and adding an earned income tax credit at 10% of the federal earned income tax credit targeted toward intergenerational poverty and a reporting requirement for sales tax exemptions to measure the economic impact, which passed 6-3-1.
Mayne made a motion to amend Hillyard’s proposal to add a sales tax exemption to feminine hygiene products, which passed 9-0-1. Schultz moved to open a bill file to amend the state constitution, allowing the task force to dissolve the revenue silo created by an income tax earmark for education funding.
Another motion by Schultz included finding alternative sources of funding for the public education system that are more stable. The first motion to amend the constitution passed 7-2-1, and the second motion to find a stable source of funding outside of income tax passed 9-0-1.
These motions allow staff to start drafting a bill with the proposal made by the co-chairs considered the basis for the two remaining meetings. The next meeting is scheduled to be held on Nov. 7 at 4 p.m. in room 30 of the House building.
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