Senate Threatens Sales Tax on Newspapers, Fruit Stands

Senate Threatens Sales Tax on Newspapers, Fruit Stands

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SALT LAKE CITY (AP) -- The Utah Senate is moving to impose a sales tax on newspaper copy sales, farm-stand produce and a handful of other business sales.

Senate Republicans forced committee approval Friday for a measure that would revoke seven of Utah's 35 business-tax exemptions to raise nearly $30 million in state revenue.

The scripted approval by the Senate revenue and taxation panel sent the debate to the full Senate. It brought newspaper publishers, farmers and business lobbyists to a hastily-scheduled, pre-dawn hearing in the final days of the legislative session.

Sen. Leonard Blackham, R-Moroni, borrowed from a broader Democratic proposal to offer a calculated mix of tax loopholes that would be closed. Blackham's bill would reinstate a sales tax on factory equipment, something Republicans say they oppose but which serves as a foil for extending taxes on other items, including a sales tax on newspaper copies, which have never been taxed.

"We think a tax on newspapers is very unfair," said Mark Fuellenbach, publisher of The Richfield Reaper. "It's taxing information. It's taxing Johnny's Boy Scout picture."

Scott Trundle, publisher of the Standard-Examiner of Ogden, told The Associated Press that newspapers are "not something you kick, eat or drive. This is information."

Newspaper executives say the Legislature has threatened time and again over the years to tax newspapers, forcing them to regroup for a fight.

Blackham and other Republicans denied they were trying to punish newspapers for sometimes critical news coverage of the Legislature.

"That would be a very weak ploy," said committee chairman and Sen. Curtis Bramble, R-Provo. "Who has the pen in hand? The pen is mightier than the tax sword."

If they really wanted to punish critical coverage, legislators would impose a sales tax on barrels of ink and rolls of paper, he said. Like factory equipment, ink and paper are free of sales tax.

Blackham said he doesn't buy the argument that newspapers aren't taxable products, just information. "Feels like a product to me," he said, opening his hands.

Legislators faced no resistance Friday on imposing a sales tax on cable and satellite television service. "I didn't realize we weren't" charging sales tax on cable-TV bills, Blackham said. "I never even noticed."

The Republican proposal also would tax vending machine sales and coin-operated video and amusement devices.

Coin operators Friday claimed they can't tax a loose quarter in their machines or increase their prices by the penny, an argument dismissed by Sen. Ron Allen, D-Stansbury Park, who said coin operators can "just add up the receipts and send us a tax."

The Utah Farm Bureau offered a similar argument, saying farmers usually sell produce by the dollar and rarely deal in loose change. Senate Bill 213 would impose sales tax on farm stands that gross more than $10,000 a year.

"We are in a highly competitive industry. We have high costs," protested Ray Allred, a Payson orchard farmer who runs a seasonal fruit stand. "It's a hard job to be in."

Manufacturers and their lobbyists raised the biggest stink Friday, saying it was bad policy to impose a sales tax on factory machinery, parts and maintenance. They countered that factories create tens of thousands of jobs.

"This attitude that because business is making money we should impose a tax on them is very counterproductive," said Tom Bingham, president of the Utah Manufacturers' Association. "What happens to the fleas when the dog dies?"

Some legislators argued that many of the tax breaks were doled out in times of plenty when state coffers were overflowing, and now that the state faces hard times, the least justified exemptions should be revoked.

"Our state is in trouble. Our state needs money," said Sen. Ed Mayne, D-West Valley City.

But in the end, Mayne acknowledged, closing tax loopholes will take an extraordinary act of political will for the Legislature: "Once a tax exemption is given, it's awful hard to take it back."

(Copyright 2003 by The Associated Press. All Rights Reserved.)

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