Lawmakers say increasing sales tax on food will ease budget woes

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SALT LAKE CITY -- Two state lawmakers say the Utah Legislature "bowed to the influence" of former Gov. Jon Huntsman and former House Speaker Greg Curtis when it lowered the state sales tax on food. They say the state's budget woes may be worse off now because of the move.

"There's more peer pressure at the Utah Legislature than there is in all the high schools of Utah combined," says Sen. Howard Stephenson, R-Draper. "That's what we felt at that time. That's why legislators voted to begin to eliminate the food sales tax."

"It was just the mood of the time," Stephenson adds.

Stephenson's sales food tax plan

He says the better option, in hindsight, would have been to further decrease the state income tax and keep the food tax the same as the general sales tax.

Sen. Howard Stephenson, R-Draper
Sen. Howard Stephenson, R-Draper

"Without a doubt, our budget would not be as bad off as it is now had we reduced the income tax more and left the food sales tax intact," Stephenson says.

He says the food tax is a more stable revenue source than the income tax; while incomes rise and fall with the economic times, everybody has to eat.

Stephenson and Senate Budget Chairman Lyle Hillyard, R-Logan, are now calling for the sales tax on unprepared food to be restored to the same rate as the general state sales tax: 4.70 percent.

The rate was ultimately reduced, in two separate moves in 2006 and 2007, to 1.75 percent--where it stands today.

A fight is brewing, however, on how to implement the tax. Stephenson wants the change to be revenue neutral--meaning if the food tax goes up, another tax, like the income tax, has to go down an equal amount. He calls it a tax shift with no net tax increase.

Stephenson says the cut will bring more jobs to Utah, benefiting low-income families more so than keeping the food tax down. He adds that he won't support the restoration of the food tax with out a concession to the poor.

"It is regressive," Stephenson says. "It hits hardest those least able to pay, but we can take care of that with a tax credit for the poor and still reduce the income tax the way it should be."

Low-income advocates weigh in on food tax increase proposal

At the Crossroads Urban Center, more families--even middle income--are coming in for help with food. Social justice advocate Linda Hilton can't believe lawmakers are talking about increasing the tax.

"I can't think of a worse idea in the worst recession we've had in decades to raise the sales tax on groceries, the most basic need," she says.

Hilton says she'll be at the Capitol every day during the legislative session to lobby lawmakers against the bill.

"They are looking out for themselves, they are looking out for their rich friends, at the expense of working and poor Utah families," she says.

Hilton hopes the governor will veto this bill if it reaches his desk.

Tax increase would help state budget crisis

Others would like to see a net tax increase to aid ailing state coffers. Hillyard is quoted in multiple news media reports as saying the restored sales tax on food could generate $140 million. That money would be helpful considering the state is facing up to a $1 billion budget deficit in the next fiscal year.

"The important thing is that we're reducing one tax by $140 million, and the other tax is increased by $140 million," Stephenson says.

Stephenson is pushing for a reduction in the income tax to be the counter-balance, although he would be open to reductions in other taxes as well.


Story compiled with contributions from Andrew Adams, Mary Richards and Nicole Gonzales.

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