ST. GEORGE — A grassroots organization is voicing its concerns regarding tax reform legislation drafted by the Utah Legislature’s Tax Restructuring and Equalization Task Force.
Utahns Against Hunger is working to share its concerns with state legislators and Utah residents before the task force presses to pass the legislation in a special session, which is scheduled to take place in December. The latest draft of the resolution was released Friday and a public hearing will be held at the state Capitol Monday.
Alex Cragun, Utahns Against Hunger food security advocate, told St. George News the legislation needs more time and with such influential changes, a decision should be made in the next general session and not within a special session. The extremely quick timeline does not allow for proper input and taxpayer education, he argued.
Furthermore, he said, a state legislator told him and other members of the Utahns Against Hunger organization that the state was going to pass the drafted legislations and that “it was a done deal; the train already left the station.”
“Our concern is the public isn’t being heard on this,” he said. “They’re not actually taking into consideration what people feel about this. The public’s views should be reflected.”
Task force co-chair state Sen. Lyle Hillyard, R-District 25, told St. George News in an earlier interview that he and task force co-chair state Rep. Francis Gibson, R-District 65, aren’t going to rush the process and will wait to introduce legislation until next summer, if necessary, adding that they do not have a deadline and are hoping to “do it right, not do it fast.”
In a previous meeting, the task force decided to draft legislation that would increase sales tax on food and allow the committee to open a bill file to amend the state constitution that would dissolve the revenue silo created by a tax earmark for education funding, which would require a two-thirds support in the Legislature and the approval of Utah voters.
The legislation proposes raising the sales tax on food from 1.75% to 4.85%, but includes an income tax credit of up to $125 per person annually and a decrease in income taxes. While the sales tax on groceries and motor fuel would increase for Utah residents, income tax credits and the overall income tax rate would decrease from 4.95% to an anticipated 4.64%, according to the drafted legislation.
The proposal seeks to recoup costs by extending sales tax to a number of services, including electric security monitoring, non-coin operated car washes and admission to college sporting events.
Sponsors of the proposed legislation say it is aimed at helping to expand the state’s shrinking sales tax base, address balance issues within the current tax structure and increase flexibility within the general fund as Utah’s population continues to grow.
The drafted legislation would generate about $570 million in general fund revenue and decreasing income tax revenue by about $650 million, resulting in an $80 million overall tax cut.
“We’re not out there just to raise taxes,” Hillyard said in September. “We’re out there to give us more flexibility in how we use the revenue we have.”
Utahns Against Hunger opposes the increased sales tax on food because of what they said is past research indicating a detriment to families and increased food insecurity.
The increase does come with a tax credit that is meant to alleviate some of the added pressure that comes with a required increase in a food budget, but Cragun asserted that a tax credit does virtually nothing without the proper marketing and education.
“You can’t claim a credit you don’t know exists,” he said. “We’re concerned about individuals that don’t file taxes and letting them know about this program.”
An already-existing program, the earned income tax credit, has a pick-up rate of over 75%, he said, which is one of the lowest in the nation. Despite it’s availability, Cragun also said the tax credit could come with excessive bureaucratic formalities that would be using the credit incredibly difficult.
Utahns Against Hunger is also extremely concerned with the stability of the program.
“Look at the history of grocery tax credits across the country,” Cragun said. “As the economy experiences shortfalls or economic downturns, often times grocery tax credit programs are restricted, delayed or eliminated in order to pay for larger social programs.”
In the event that Utah experiences an economic downturn, he said, the organization is concerned that families will experience a higher rate of unemployment and increased cost of groceries.
Previous studies have found that for every 1% the state increases the sales tax on food, food insecurity goes up by .6% for non-SNAP eligible households. There are currently about 363,000-373,000 individuals in Utah experiencing food insecurity in the state of Utah, which is primarily made up of children, residents with disabilities and the elderly.
Young people and women with children are also increasingly susceptible to experiencing food insecurity.
“As a young, rural state, we should be taking these things into consideration when we’re crafting policy,” Cragun said.
Southern Utah has a large population of college students and elderly residents on fixed incomes, which Cragun said are largely affected by sales tax on food, especially with the increase in property taxes and the increased cost of heating and cooling.
Individuals will often forego fresh fruits and vegetables for less nutritious, less expensive options — like ramen noodles and potatoes — in times of economic hardships to ensure they are able to pay their rent or mortgage.
“The food budget for a family, for the most part, is the most flexible of the budget,” he said.
The entity is asking the Utah Legislature to avoid increasing sales tax on food and instead look to other policies that would expand the sales tax base while supporting families.
In its place, Cragun said he supports HB148, which proposed eliminating the sales tax on food and instead increased the overall SNAP tax rate on non-food items. During the 2018 General Session, the bill passed in the state House with a decisive vote but was never heard in the Senate.
Utahns Against Hunger has since started a petition and drafted a letter asking lawmakers to reconsider their proposal.
The task force is expected to reconvene in room 30 of the House Building on Monday at 5 p.m.
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