Utility tax-cut plan moves to Legislature
California consumers would get around $1 million of the break
The tax cut was sent forward by the Legislature's Revenue and Taxation Interim Committee despite members learning Wednesday the deal benefits consumers in California. Because the Intermountain Power Project near Delta sells 89 percent of its power to California, users there will get around $1 million of the tax cut.
It may be unintended, it may sound rather silly, but it's the only way to get rid of the so-called "gross receipts tax" on the two utilities and force the $3.4 million to be passed along to rate payers — no matter where those rate payers happen to live, the committee was told.
While the state Tax Reform Task Force and the interim Revenue and Taxation Committee have talked about the possible reduction for months, that California electrical consumers would get part — and such a large part — of the tax cut hadn't been mentioned before.
The other large producer, Utah Power, sells all of its power inside the state. And, committee members were told, Utah Power provides just over half of all the power consumer, with IPP, which is owned by a number of Utah cities and towns, providing most of the rest of the electrical power.
The 1995 Legislature placed the tax on the two large utilities for several reasons, legislators were told, in part because lawmakers didn't want to give the utilities the same percent of property tax cuts they were giving other taxpayers that year and in part because of a court decision.
It has always been wrong to place the extra tax on the two large utilities, Sen. Howard Stephenson, R-Draper, said previously.
The tax break adds an ironic twist to efforts by the state Tax Reform Task Force to change the tax structure to help Utahns, including finding ways to shift where possible the tax burden onto non-residents.
E-mail: bbjr@desnews.com
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