January 31, 2007 Why I oppose HB 282…
There has been much discussion in the media and at the Capitol regarding sales tax on food. HB 282, sponsored by Rep. Merlynn Newbold, will create a single sales tax rate of 4% on food purchases. In essence, this bill removes the sales tax on food for resort communities, transit districts, and in cities with RAP and ZAP taxes. The bill would cost these entities approximately a combined $20 million. Here are three simple reasons why I oppose this bill:
1. Bad Tax Policy – Legislators supporting this bill often express the benefit repealing the sales tax on food will have for Utah’s low income families. I agree with this concern, but think there are other ways to address the need of low income households (and let’s be honest, this is the same Legislature that last year cut $2 million in dental care from its Medicaid plan…plus, I don’t think anyone really believes that reducing the sales tax at grocery stores in Park City is really aiding Utah’s most needy families). Anyhow, in my opinion it is bad sales tax policy to narrow the base. I would rather lower the tax rate and expand the base. For example
- Average State sales tax rate with food taxed – 4.8%
- Average State sales tax rate with food exempt – 5.5 %
The more we narrow the base the higher our rate will be pushed as soon as the State needs money to balance their budget in future years.
2. What about the voters? – Just in November voters in Salt Lake County approved (over 60% in favor) a sales tax increase to be dedicated to transit. Now the Legislature is going to cut the base and with it the revenue this tax increase can generate? I understand that some Legislators don’t respect UTA, but what about the public? It seems to me the Legislature does not respect the opinion of the 140,000 SL County residents voting for Prop 3.
3. One Size Does Not Fit All – There is a reason that we allow for resort community taxes, resort hospital taxes, transit districts, RAP and ZAP taxes. We recognize that our state is diverse and local jurisdictions need flexibility to address the needs of their area. Reducing the tax on food for these distinct taxes reduces flexibility and local control.
I should add I’m not alone in this opposition. The ULCT League Policy Committee voted unanimously on Monday to oppose this bill.