ST. GEORGE — A bill that aims to eliminate the sales tax on food was folded into a larger bill on Tuesday that lawmakers say will cut state taxes up to $400 million. This bill along with a companion bill have until Friday to pass the Legislature in order to pave the way to the ballot box where the fate of the food tax will be decided by the people.
The sponsor of the food sales tax amendments bill, designated HB 101 in the 2023 Utah Legislature, Rep. Judy Weeks Rohner, R-West Valley City, announced during a Senate Revenue and Taxation Committee hearing held Tuesday that her bill had been combined with the tax revisions bill, designated HB 54. This resulted in HB 101 being held in committee as there was little need to debate it.
As for HB 54, it had passed out the Senate committee with a favorable vote the day before.
HB 54: The $400 million tax cut
HB 54, sponsored by Rep. Steve Eliason, R-Sandy, and Sen. Daniel McCay, R-Riverton, decreases the state income tax from individuals and businesses from 4.85% to 4.65%, which Eliason said on the House floor last week equates to around $380 million in tax cuts. This translates into an annual savings of around $208 (or $17 a month) for an average Utah family of four with an annual income of $80,000.
Other elements of HB 54 include:
- Social Security tax credit eligibility to individuals earning up to $75,000 per year.
- Provides a tax benefit for pregnant women by allowing a double dependent exemption for children in the year of their birth.
- Increases the earned income tax credit from 15% to 20% of the federal credit.
As for how the tax cuts relate to Utah households, according to lawmakers, low-income households will see about a 22% tax cut, middle-income households will see about a 6% tax cut and high-income households will see about a 4% tax cut.
HB 54 passed the House last week with a 65-7 vote. Each of Southern Utah’s representatives – Reps. Walt Brooks, Colin Jack, Neil Walter, Joseph Elison and Rex Shipp – voted in favor of the bill. Each is also named on a long list of House cosponsors.
The bill passed the Senate Revenue and Taxation Committee next, with Sen. Don Ipson, R-St. George, saying, “I think it’s good tax policy. It reduces taxes on productivity and it’s a very good bill.”
Proposal to repeal the sale tax on food and the need for a constitutional amendment
Prior to being absorbed into HB 54, Rohner’s bill passed the House last week in a 57-13 vote with each of Southern Utah’s representatives voting for it.
“Utahns have made it clear that removing the tax on food is top priority,” Rohner told the Senate committee Tuesday.
Issues of inflation and the increasing cost of food at the grocery store have also bolstered the public’s desire to get rid of the sales tax on food, she added.
Rohner told the committee that repealing the food sales tax could create a $20 million tax reduction in 2025 when the repeal would take effect – provided Utahns approve the measure through the ballot box in 2024.
The reason Utahns need to vote on the issue is because sales tax is earmarked in the state constitution to go toward public education funding, and it requires a constitutional amendment to remove that earmark.
This is where a joint resolution for the proposal to amend Utah Constitution, designated SJR 10 in the 2023 Utah Legislature, comes in.
Sponsored by McCay and Rep. Karen Peterson, the Senate joint resolution, if passed, will put the question of repealing the food tax to the voters in 2024. It passed the Senate on Tuesday in a 22-6 vote and now moves to the House.
Southern Utah Sens. Don Ipson, Evan Vickers and Derrin Owens each voted in support of the bill.
While HB 101 – now a part of HB 54 – and SJR 10 have their supporters in the Legislature and groups like the Utah Taxpayer Association, they also have opposition, which primarily comes from public education and its supporters, who have expressed concerns that removing constitutionally-mandated funding for education will threaten future funding and the quality of education for students moving forward.
“It’s going to significantly damage education and the morale of teachers,” Mark Clement, a member of the Alpine School Board in Utah County, told the Senate Revenue and Taxation Committee last week while SJR 10 was being discussed.
Clement added that the Legislature should work with education and teachers on ways to provide better funding rather than work on ways to take that funding away.
Committee member Sen. Curtis Bramble, R-Provo, said the state already funds many services and programs that it is not constitutionally mandated to but does because it is what the people want and expect – and the same applies to education regardless of whether it is highlighted in the state constitution.
“Education is the No. 1 issue on the minds of citizens … and is the No. 1 issue for legislators,” Bramble said. “So this red herring argument about if there’s no constitutional guarantee, there won’t be funding for education – that’s union speak. We represent the people and the people demand that we honor that every child is entitled to a free and essentially equal public education. That’s not changing with this earmark.”
The Utah Democratic Party issued a statement last week opposing lawmakers tying the repeal of the sales tax on food to education funding.
“First, Republican politicians handcuffed crucial pay raises for our teachers to a harmful voucher program, and now they’re holding the removal of the food tax hostage unless voters give in to their demands and allow them to raid the education budget,” state Democrat Party Chair Diane Lewis said in the statement. “Utahns are sick and tired of their legislators playing cynical political games when it comes to critical issues facing our state.”
The legislative session ends Friday.
Check out all of St. George News’ coverage of the 2023 Utah Legislature here.
Copyright St. George News, SaintGeorgeUtah.com LLC, 2023, all rights reserved.