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New Tax-Cut Compromise in the Works

New Tax-Cut Compromise in the Works

Estimated read time: 3-4 minutes

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By Lisa Riley Roche and Bob Bernick Jr.There's yet another new approach to tax cuts.

Tuesday, Senate leaders said they're working with their House counterparts on a proposal that would eliminate the locally assessed, so-called "boutique" taxes on food while at the same time trimming the state sales tax charged on all purchases from 4.75 to 4.7 percent.

But in places where additional sales taxes are collected for transit projects, such as Salt Lake, Davis and Weber counties, the sales tax charged on all purchases could be raised by that same amount cut, .05 percent, so no money would be lost in those areas.

The .05 percent tax would also be available to municipalities outside of transit districts — where those local cities and towns have imposed a special small sales tax to build local roads.

The tax-cut compromise is complicated. But it's a way to keep all of the so-called "boutique sales tax" entities whole when the sales tax on food is taken out of the tax base, said House Speaker Greg Curtis, R-Sandy.

"Dropping the rate across the state" and then switching that tax authority where needed "will put about $21 million statewide" into those boutique tax areas — and keep them whole, the speaker said.

Senate President John Valentine, R-Orem, said the amount of the general reduction in state sales tax would be about the same, and so no taxing entities are harmed.

And it's progress from what Senate leaders were saying just a day earlier, when they said they didn't want any reduction in the sales tax on food, preferring instead a cut in the overall sales tax rate.

Even though few details of this latest proposal have been worked out, Valentine said he is optimistic lawmakers will settle on what tax cuts to make before the session ends at midnight on Feb. 28.

Senate and House GOP leaders have agreed to set aside $220 million for tax reductions.

Valentine said the focus will be on finalizing budgets during the last week and a half of the session.

"We've made some pretty good progress," Valentine said before Tuesday night's meeting with House leaders. Another meeting on budget issues between the Senate and the House is set for Wednesday. "We're going to work around the clock."

He described the tax cuts as being on a "parallel track" with budget issues.

But House Republicans are still holding firm that they want the general reduction on the sales tax on food — something that GOP senators are trying to stand firmly against.

Curtis said that in GOP House and Senate leadership meetings Tuesday morning as one senator demanded that new state buildings be constructed in his area, "If we keep seeing blogs about no food sales tax cut, then you don't understand this process as I do." Curtis was referring to a dust-up Monday where two leading GOP senators blogged that there would be no further reductions of the food sales tax because Curtis promised last year that kind of a tax cut wouldn't be made in 2007. Curtis disagrees with the men's allegations.

In short, there is give-and-take on budget and tax cut matters, and senators may be short on giving, more on taking, several GOP House members were saying Tuesday.

Curtis said the latest compromise on the boutique taxes, which he fully supports, won't happen on its own. That compromise will come when the final tax-cutting package is adopted, probably toward the end of the 45-day session next Wednesday at midnight.

------ Information from: Deseret Morning News,

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