Faced With Referendum Challenge, Utah Legislature Votes To Repeal Tax Reform Law

Jan 28, 2020

Credit upr.org

The Utah Legislature passed a bill fully repealing the new tax law Tuesday, a little more than a month after it was first approved. 

State leaders announced the legislature would repeal the new tax law just a few days before the 2020 general session began. The likely success of the tax reform referendum pushed them to the repeal, to be able to budget for the session.

Mapleton Republican Rep. Francis Gibson co-sponsored the initial tax bill and the repeal. On the House floor Tuesday, Gibson praised parts of the bill but acknowledged the public didn’t support it. He says it’s inevitable that a tax restructuring law comes before the legislature again.

“We may even see some of it this session, but we will be back to continue to look at this issue," Gibson said. "Let me be really clear for those who are listening in the audience, online, in this room: We do not have a money problem in the state of Utah. We have a distribution problem.”

The Senate took up the legislation after the repeal passed the House 70 to one, with only Orem Republican Keven Stratton dissenting. Logan Republican Sen. Lyle Hillyard, the other sponsor of the tax law and its repeal, feels people will be missing out on benefits from the bill, such as income tax credits for low and fixed-income taxpayers and the general income tax cut. Hillyard says he hopes pumping the brakes on tax reform gives legislators and candidates for governor the opportunity to ask a simple question of constituents.

“What would you do?" Hillyard said. "Now, it's easy to criticize what we chose to do, and to pick bits and pieces out of it, but I can assure you we face a crisis when it comes to the general fund.”

Tim Quinn, the Republican representative from Heber who helped launch the conversation about tax reform, voted for the repeal. He also voted against the tax bill in the December special session. Quinn ran his own bill in the 2019 general session that expanded the sales tax base to many services while lowering the sales tax rate. The bill ultimately failed, launching the tax reform task force and public input process that happened for much of 2019. Quinn has mixed feelings about how things turned out.

“I guess I'm relieved in some ways because I think it was bad policy, so now we don't have that bad policy—we have to kind of start over," Quinn said. "But frustrated as well because I have heard from some of my colleagues today on the floor, 'well, at least we now know that people are really against sales tax on food,' and I'm like, it shouldn't have taken this bill and this referendum to realize that.”

Quinn says there’s no way the legislature will pursue a big, structural tax reform this year, though he intends to run a bill related to dependent exemptions—something that was included in the new tax law—in response to the 2017 federal tax law. Although Hillyard says he hopes not to see an individual bill addressing dependent exemptions, Quinn says he’s entitled to his own opinion and Hillyard’s opinion is wrong.

(UPDATE: Utah Gov. Gary Herbert signed the repeal legislation, House Bill 185, Tuesday evening, fully undoing changes to Utah's tax code made in the December special session.)