Food tax could double
February 1, 2013
Summit County residents ringing up at their local grocery stores may be on the receiving end of an increase to the food sale tax in coming months as plans to introduce a flat rate tax move forward. Sen. John Valentine, R-Orem, is currently in negotiations with House Representatives in the Utah State Legislature. The bill was first introduced during interim sessions last year and would raise the current 1.75 percent tax on foods to a flat sales tax rate of 4.25 percent, the same rate as nonfood items, as a way to increase the state’s revenue stream.
"The bill is mostly drafted," Valentine said. "We’re still negotiating portions of it with the House. The Senate is pretty much on board. What we’re trying to accomplish is this: a greater stability in the sales tax base that we lost."
In 2006 and 2007, the food sales tax was reduced from the 4.75 percent what Valentine is now proposing to return to to a 1.75 percent rate which was backed by former Utah Gov. Jon Huntsman. When the shift was made, the sales tax was broken into two categories encompassing food and nonfood items.
"The general fund is made up primarily of the sales tax. When you have the general fund budget becoming narrower in a time when there is a higher demand for social services, you can see the instability in the tax structure," Valentine said. " We still want to give a refundable credit to those who would have a more difficult time with the increased tax."
In general, the bill has received support from Utah businesses. The current tax rate system requires multiple codes for stores, meaning that while a loaf of bread and cold cuts may be charged at the 1.75 percent, a pre-made sandwich would be charged the 4.75 percent. Every item, from the shampoo to candy, must be assigned a tax rate, quickly complicating the process.
"When anyone goes through the line buying mixture of items, which is typical, they get charged a different amount based on the item," said The Market at Park City owner Mike Holm. "I can’t give a definitive answer on what we charged for the sales tax because each item has been programmed individually. It does get bogged down."
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"I’m in favor of a flat rate on the tax system," he added. "It would be easier from my perspective as business owner."
Criticism among low income assistance-based groups remains divided on the issue, with some in support of the concept and others in strong opposition. Valentine said he aims to include a provision that would allow those making less than $35,000 a year to receive a state tax credit for food, an intended $80 per person every year. A family making less than $60,000 would be eligible to receive $40 per person.
Rob Harter, the Executive Director of the Christian Life Center in Park City, said he had his reservations on the issue, though he admitted his knowledge of the bill was limited until something more formal was introduced to the Legislature.
"This bill could create some tough questions," Harter said. "My initial and uninformed opinion is to think it would be tough for families to come up with the money initially."
"We find that the people who come to the pantry, they are literally asking whether or not to eat today or to pay their mortgage, whether to put gas in car or get food. These limitations are very serious, very real. There is no margin."
But Valentine maintains the bill would completely refund families who completed their taxes, that the process would include an extra box on their tax forms.
"Let’s make the system easier," he said. " Economically, this makes sense."