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House burns midnight oil without reaching agreement on tax plan

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House burns midnight oil without reaching agreement on tax plan

By Amy Joi O'Donoghue | Posted - Mar. 3, 2017 at 11:16 a.m.



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SALT LAKE CITY — House Republicans worked late into the night Thursday debating the respective merits of tax reform proposals intended to broaden the tax base and lower rates, but leaders said they reached no consensus.

Meeting in a closed–door caucus that ended shortly after 9 p.m., House members wrangled over the implications of restoring Utah’s food tax and changes to the state’s income tax system — steps House leaders say would help ensure further investment in jobs and economic expansion.

"We're talking about things that are pretty simple, lowering the income tax rate and putting the sales tax back on food and basically holding groups of people in income brackets harmless — in fact some would be getting a tax cut — especially those on the lower income side," said House Majority Leader Brad Wilson, R-Kaysville.

But no decisions were reached.

“We narrowed our focus a little bit to decide whether we want to move forward. We have on option that is under consideration but we made no determination whether or not to move forward. We probably will be ready to do that tomorrow,” Wilson said.

Asked if the issue would instead be addressed in a special session, Wilson said his personal preference “is always to deal with things in a legislative session instead of a special session. It costs the taxpayers less money. I think we got better rhythm during a general session, so we’ll see.”

Senate Republicans have already backed a tax reform package that also includes income tax changes and a drop in both sales and income tax rates. There are only five full working days left in the 45-day legislative session.

“I think we’re pretty flexible here in the Senate as long as it makes some good sense,” said Senate President Wayne Niederhauser, R-Sandy. “We’re very amenable to a range of ideas.”

He said there is a high probability such a package could pass in the Senate.

But the Senate president said if the House doesn’t settle quickly on a proposal from options under consideration to broaden sales and income tax bases while lowering rates, lawmakers may be out of time to tackle the issue.

“I’m hopeful,” Niederhauser said earlier Thursday. “It’s going to be pretty late for anything to happen, yes. But I think it’s a discussion we’re going to continue to have.”

Earlier in the day, Utah Gov. Gary Herbert said he is not opposed to raising the sales tax on food as long as the architects of that change work to alleviate negative consequences for vulnerable populations who could suffer the most harm.

“We have asked to have some tax reform. What we have in place now is not sustainable long term,” Herbert said during a briefing with reporters.

“We have got to make some adjustments,” the governor said. “We really have narrowed the base and that’s putting pressure to raise taxes.”

Senate Minority Assistant Whip Luz Escamilla, D-Salt Lake City, said Democrats are "struggling" with the proposal because of "very real, serious concerns with the sales tax on food," even though they agree reform is needed.

Republicans hold a supermajority in the House and Senate and can pass veto-proof legislation without any Democratic votes.

The governor said he was opposed to the reduction of the sales tax on food that happened before he became governor, a drop from the 4.7 percent state sales tax rate to 1.75 percent.

Over the past several years, Herbert said the state's sales tax base has been steadily shrinking, leading to volatility and vulnerability in the budget.

The governor pointed out that it used to be that 72 percent of the state's gross domestic product was taxed. That has now shrunk closer to 40 percent of the GDP.

"Putting the sales tax on food and lowering the overall rate is one possibility. … Overall we have a plethora of options out there. That is one of them," he said.

Herbert said the review of tax policy is a continuing exercise among state leaders to adjust to the dynamics of a changing marketplace and to ensure tax fairness.

"We are trying to find the optimal balance point," he said. "There is probably no such thing as a perfect tax policy. … It is not easy to do. It's complex."

Herbert added that he remains concerned about the proliferation of tax exemptions and tax credits and has called for an extensive review, something legislative leaders are already planning to do during the interim before the 2018 Legislature.

"It is complex," the governor said. "It is kind of like whack-a-mole. You knock it down here and it pops up over there."

Later, Herbert said he was on board with liquor reform proposals surfacing in the Legislature, including broadening the options for restaurants with the so-called "Zion Curtain" and dropping the legal blood alcohol limit to .05, which would be the strictest in the country.

Contributing: Lisa Riley Roche

Amy Joi O'Donoghue

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