The state legislature’s Tax Restructuring and Equalization Task Force met for the final time Monday, and a special session of the full-legislature could be held as soon as this week to approve this sweeping tax reform bill.
The 199-page draft bill to shore up the state’s general fund includes a $160 million tax cut.
Specifically, the proposed legislation reduces the income tax rate by three-tenths of a percent and provides exemptions for dependents—and one exemption for couples without kids. There are also income tax credits for social security income; earned income tax credits for people experiencing poverty; and grocery tax credits for low-to-middle income residents.
In terms of sales tax, the bill calls for restoring the full state tax on groceries, back up to 4.85%—a more than 3% increase. It also includes new sales tax on gas at the pump and expanding sales tax to a handful of services, like ridesharing, parking garages and streaming media.
Given all of that, legislative analysts expect 84% of taxpayers would see a tax decrease and 16% would receive a tax increase come tax season.
What’s not part of the bill is a proposal to remove the constitutional requirement that income tax be spent on education funding. That will be considered in a separate bill in the general session. If the constitutional amendment passes two-thirds of the House and Senate, it will be put to voters.
Utah State Tax Commission Chair John Valentine told the task force if they didn’t act now, it would be difficult to reform the state tax code in the 2020 general session.
“If you wait, thinking it's easier to do it by kicking it down the road into the general session, I'm afraid you're probably wrong," Valentine said. "Because you'll spend the whole general session re-going through the same issues over and over again, and you'll be then tied up trying to budget and make these policy decisions at the same time.”
The task force heard public comment from 50 participants through the course of the nearly five-hour meeting. In his final thoughts on the bill, House District 54 Rep. Tim Quinn listed commendable aspects of the process—the work put in by staff and communication between the legislature and the public. But the Heber-based Republican noted that comments made in favor of the bill seemed to be staged, which convinced him to share his concerns.
“It seemed odd to me that so many business owners and associations would come up and not just speak in favor of the bill but then say how much better this bill would be in a special session, as opposed to the general session," Quinn said. "It seemed contrived to me.”
Quinn cited comments from the task force about how this bill would update the state’s tax structure to accommodate the changing economy, from goods to services. With projections that the bill would only address budget concerns for five years, he says it’s not enough.
“I think that if I voted for this bill, I would have to go get a shoe shine afterwards because my shoes would be scuffed from kicking the can down the road,” Quinn said.
Quinn says the bill’s two biggest sales tax measures—the food tax and gas tax—are fruitless efforts to add revenues to the sales tax-based general fund, as gasoline and grocery sales continue to decline.
“So the very fund that we're trying to shore up with gas and food we're shoring it up on the two components of our economies that are shrinking and will continue to shrink,” Quinn said.
In the end, the task force voted 6-3 to favorably recommend the bill to the full legislature, with Quinn joining Democrats Rep. Joel Briscoe and Sen. Karen Mayne in opposing the motion. On Tuesday, Utah Gov. Gary Herbert called legislators to a special session for Thursday, Dec. 12.
Quinn–who unilaterally sponsored a tax reform bill that failed last session—told KPCW he plans to vote against this bill in the special session.