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Governor announces deal with Amazon to collect sales tax on Utah purchases

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MURRAY — will collect sales tax on Utah purchases, Gov. Gary Herbert announced Wednesday during a discussion of his proposed $16.1 billion state budget that calls for "aggressively" pursuing taxes owed on online purchases.

"News flash: Amazon has agreed," the governor told members of the Deseret News and KSL editorial boards. "We have been working to get a voluntary agreement with Amazon, and it looks like we’ve done that now."

The massive online retailer will begin collecting both state and local sales taxes on purchases made directly from by Utahns on Jan. 1, Utah State Tax Commission spokesman Charlie Roberts said.

Roberts said the commission does not know how much money can be anticipated from the agreement with, signed within the past few weeks. He said the agreement is similar to deals the company has made with other states.

Utah law requires residents who aren't charged sales taxes on their online purchases to pay them with their state income taxes. But few comply, and efforts over the years to pass a federal law forcing companies to collect the taxes have faltered.

Messages left for officials were not immediately returned.

The governor has made going after the estimated $200 million in sales taxes lost annually from online purchases a priority for what he termed a comprehensive review of tax policy that will also look at sales and income tax exemptions.

His budget calls for the creation of a task force made up of business and education leaders charged with promoting "an equitable and simple tax system" by aligning taxes "with the modern economy (not just a rate increase)."

There are no tax increases in Herbert's spending plan for the new budget year that begins July 1, 2017, put together with a list of principles including a pledge to "live within our means" while paying off government debt and operating government efficiently.

His planned tax review follows the recent launch of the "Our Schools Now" initiative by the business community that would ask voters in 2018 to increase the state's 5 percent income tax rate by 0.875 percent to raise $744 million annually for schools.

The governor opposed raising income taxes during his successful re-election campaign, warning that would hurt the business sector by killing "the goose that's laying the golden egg," a phrase he repeated Wednesday.

Throughout the campaign he stopped short of promising there would be no tax hikes during his term, however. The Republican-controlled Utah Legislature, set to begin meeting in late January, has not been receptive to income tax increases.

Senate President Wayne Niederhauser, R-Sandy, said he supports a review of the state's tax structure, but a number of the tax exemptions given to businesses, especially from paying sales tax on raw materials, are a "good thing."

Niederhauser said he agrees with the governor that broadening the sales tax base is the best way to add to state revenues, not raising the income tax rate reduced under Gov. Jon Huntsman Jr. to make the state more attractive to new businesses.

Herbert told the editorial boards that he is "not pushing" the proposed initiative to put an income tax increase on the ballot. He said the state could raise potentially "a couple hundred million" dollars by closing tax loopholes, but did not identify any.


Education funding continued to be a key part of his budget, with 79 percent of the new ongoing revenue available set aside for education — $260 million for public schools and higher education.

That's less than the $422 million he asked for in last year's $14.8 billion budget proposal, but it covers the 10,100 additional K-12 students anticipated and a 4 percent increase in the mechanism for funding schools, the weighted pupil unit.

Revenues are forecast to grow more slowly than last year, when the governor recommended putting about 70 percent of new money into education. There will be nearly $287 million in new ongoing funds, about $100 million less that last year.

Herbert's goal, set last year, is to boost the state's committment to public schools by a total of $1 billion by 2020. With his latest budget proposal, spending would total $425 million for the first two of five years.

Public safety received special emphasis, because at "a time of increased scrutiny of law enforcement and added threats to our communities, it is critical that we attract and maintain the best and brightest within this field," according to the budget.

Unlike past years, when the governor has announced his budget proposal at a school or university, Herbert used a Utah Highway Patrol classroom to talk about nearly $1.5 million in salary increases for troopers and other public safety officers.

Those include corrections officers and others working in the state prison system. His budget would provide $7.6 million for not just a pay hike but also the creation of a career ladder to adjust salaries as employees advance in rank and experience.

There is $1 million in the governor's budget for public safety equipment to help troopers better do their jobs, and an additional $750,000 for the state crime lab and evidence management.

The pay increase proposed for all state employees in the governor's budget is 1 percent, with additional money for public safety and other targeted positions. The budget has $7.1 million to cover increased health insurance and retirement costs.

Air quality and water management are highlighted in the budget, too, with $1.45 million allocated for air quality monitoring and another $250,000 for research into improving the air.

The state's $32.4 million share of a settlement with Volkswagen over emissions issues with their diesel engines that will be paid out over 10 years is in the budget to replace or repower eligible diesel vehicles.

Herbert wants $5 million for programs aimed at making water use more efficient, including $2.2 million for rebates connected to outdoor watering, as well as $4.5 million to collect and study information about water use throughout the state.

His budget also stressed $1.7 billion in state debt paid off over six years. The only bonding he is seeking is up to $100 million to pay for infrastructure at the new state prison being built west of the Salt Lake City International Airport.

The state's Rainy Day Fund is at $550 million, key to what the governor's budget labeled an effort to be ready for an economic downturn.


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Lisa Riley Roche


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