Food tax boiling on front burner as legislative session starts
Fight may pit Senate GOP, House GOP, Huntsman
The governor is believed to be on the verge of announcing his own plan for taking the sales tax off food: increasing the state and local sales tax on other items to offset the estimated $226 million that would be lost by state and local governments.
But the GOP Senate is now talking about a $100 million tax cut in next year's budget — in the form of a $75-per-person refundable personal income tax credit for sales tax paid on unprepared food for families earning less than about $40,000.
When the Senate majority caucus votes on the proposal, likely Thursday, it will be the first time that Senate Republicans have locked on to a tax cut number. Last month, House Republicans voted in caucus to give a $230 million tax cut in fiscal 2006-07.
Huntsman, also a Republican, proposed a $60 million tax cut in his budget that included $37 million toward taking the sales tax off food but no explanation of exactly how he'd like to see that accomplished.
That may well change in his State of the State address tonight.
Asked about the tax credit being discussed by the Senate, Mower said the governor's goal is to simplify taxes. Providing any type of credit on state income tax forms, he said, would "make them more complicated."
This morning, the House Republicans' food tax bill — HB109, which removes the state and local sales from food completely — goes before a legislative committee where it is expected to pass.
Still, Senate President John Valentine, R-Orem, said a tax credit is the most "elegant solution" to dealing with the hated tax on food, allowing lawmakers to, in effect, eliminate the tax for low-income Utahns without having to find a way to make up the loss.
The Senate's food tax stand reflects the wishes of a variety of Utah businesses — which don't want to pay a higher sales tax rate on nonfood items, an estimated 1.1 percent increase, Valentine said.
It also eases concerns raised by Democrats and others that some government programs, especially those aimed at helping the poor, could go on the chopping block to cover the cost of the tax cut.
The price tag for removing the sales tax from food at the state level is as much as $166 million annually. Another $60 million or so is collected at the local level, money that many smaller communities heavily depend on.
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