Report: Utah families may pay up to $140 more in taxes

Report: Utah families may pay up to $140 more in taxes

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SALT LAKE CITY — A Utah family earning $50,000 a year could end up paying nearly an additional $140 annually in gas, property and sales taxes thanks to the 2015 Legislature.

There was no discussion of the report delivered Tuesday to members of the Legislature's Executive Appropriations Committee about the impact of an optional 0.25-cent local sales tax for transportation approved last session.

The Proposition 1 increase, on the ballot this November in 17 of the state's 29 counties, represents a potential boost of about $108 million, according to Thomas Young, a senior economist with the Legislature's Fiscal Analyst's Office.

The would put the average sales tax rate in Utah at about 7 percent, Young said, "right in the middle" of states. Tennessee has the highest sales tax at 9.45 percent, while there are no sales taxes in Oregon, Montana, Delaware and New Hampshire.

The additional 0.25 cents in sales taxes, intended to fund roads, transit, trails and sidewalks, would cost a family of four spending $20,000 annually on nonfood taxable items about $50 a year, Young said.

His report also included the impact of statewide property and gas tax increases also passed last session. Unlike the sales tax hike for transportation, those increases do not require voter approval.

The same law allowing counties to seek the sales tax hike also raises the state's 24.5-cent-per-gallon gas tax by 5 cents starting in January, adding about $42 annually to the cost at the pump for a family driving 13,000 miles per year, the report said.

Report: Utah families may pay up to $140 more in taxes

The report also cited another new law, intended to raise some $75 million for public education, as adding about $47 a year to the property tax bill for a family living in a $250,000 home.

Report: Utah families may pay up to $140 more in taxes

No action was taken by the committee on the report, which described local sales tax increases as diminishing the state's taxing capacity. The report was presented just after an update on the surplus from the budget year that ended June 30.

The surplus added up to $103 million, with $59 million automatically going into the state's Rainy Day funds, leaving $44 million in one-time money available for lawmakers to spend in the 2016 Legislature that begins in January.

The surplus is a result of $119 million more in the education fund because income tax revenues grew more than 9 percent, minus a $16 million shortfall in the general fund.

The bulk of the general fund, sales tax revenues, were up 4.8 percent, but that was about $15 million less than expected. The difference was blamed largely on more Utahns making purchases online but not paying sales taxes.

Internet tax under reported

When taxes aren't collected by an online retailer, Utahns are supposed to submit them on their income tax returns. However, only about $1.5 million of the estimated $190 million in Internet sales is being reported by Utah taxpayers.

Taxable Internet sales are up 21 percent in Utah compared with 6 percent nationally, and are expected to continue to climb, according to report on the surplus from Young and Andrea Wilko, chief economist for the fiscal analyst's office.

More tax increases to come?

Senate President Wayne Niederhauser, R-Sandy, said there may need to be more tax increases in the future to bolster the general fund, especially since sales tax revenues have had to be used for roads.

"I don't think we're done with that," Niederhauser said. That could mean adjusting the gas tax or, he said, "there has to be some increases in sales tax to compensate for the loss of revenue we're getting over the Internet."

Those are decisions for the future, he said.

"There's no way we're going to address that anytime soon," Niederhauser said. "Next year, we're not going to deal with this. But we do need to look for a long-term solution."

House Majority Whip Francis Gibson, R-Mapleton, said not everyone supported last year's tax increases. He said he voted against the property tax increase.

"There are costs that are rising. Revenues are staying flat. I do think there are certain things that need to be looked at," Gibson said. "But I would not say that those tax increases were unanimous by any means."

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UtahFamily
Lisa Riley Roche

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