Task force nibbles at food sales-tax issue
"We need to have the discussion. We need to make the recommendation whether we keep it or not," the task force's co-chairman, Rep. Wayne Harper, R-West Jordan, said after the first meeting of a subcommittee studying sales taxes.
During the meeting, though, Harper described removing sales tax from food as "narrowing the base significantly" and said he'd like to know how much the sales tax rate would have to be raised to compensate for the lost revenue.
The task force is focused on looking for ways to broaden the sales tax base to increase revenues. That's likely to be by extending sales taxes to services, possibly including health care.
Several at the meeting suggested an earned income tax credit for the working poor should be considered instead. Taxpayers earning below a certain level of income would not only get their taxes back, but also additional money intended to reimburse them for sales taxes paid.
"That would go a long way toward mitigating the claimed regressivity" of some taxes, the task force's other co-chairman, Sen. Curt Bramble, R-Provo, said. Opponents of charging sales tax on food purchases say it disproportionately hurts the poor.
GOP lawmakers have been talking about tax cuts, not tax increases, in recent weeks as overall state revenues continue to climb. Those cuts would be on top of any changes made to tax rates as a result of the task force's work.
Gov. Jon Huntsman Jr. said he doesn't want to see "tax cuts for the sake of tax cuts" and that he will push for taking the sales tax off food. Huntsman campaigned on the issue, and said "now is the time" for the tax break.
Huntsman said the cost of eliminating the tax — $160 million is collected annually by the state on food sales plus another $58 million at the local level — could be offset by limiting the type of food exempted.
"Food is food," Bramble said, suggesting that the governor's proposal would be too complicated especially if sales tax rates are streamlined. "That's going to be a bit of a challenge."
Taking the sales tax off food will be considered as part of what the subcommittee adopted Tuesday as its top priorities — a list that included examining all sales tax exemptions as well as what other states have done in regard to taxing services.
The task force is expected to wrap up its work this fall, in time for its recommendations to be reviewed before being taken to the 2006 Legislature. The starting point for their work is an analysis done by former Gov. Olene Walker.
Walker recommended extending the sales tax to services. Broadening the sales-tax base, her analysis found, would allow the rate to be lowered. But she did not recommend taking the sales tax off food.
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