House votes to repeal sales tax on food Patrick Parkinson Of the Record staff
Many residents won’t complain about paying less at the grocery store checkout counter, but if Summit County’s state senators have their way Utah’s sales tax on food will remain intact.
The state House of Representatives Thursday voted 57-17 to repeal sales tax on unprepared foods. Lawmakers say the tax cut could save citizens more than $200 million a year.
But governments in rural Utah depend on sales tax revenue from groceries for steady funding for services. Two stores in Coalville generate nearly a third of the city’s sales tax about $4,000 per month, Coalville Mayor Duane Schmidt said.
"I’m disappointed," Schmidt said Friday. "It is going to hurt the small towns because that is our main source of sales tax income."
Though Republican Rep. Merlynn Newbold’s House Bill 109 attempts to hold local governments harmless by allowing officials to increase sales tax for other items, that’s just a "tax shift," said Sen. Allen Christensen, a Republican who represents most of eastern Summit County. "That’s just a political ploy and it doesn’t accomplish what we really want it to," Christensen said.
Lawmakers are working with a budget surplus during their 2006 general session and Christensen says he would support a roughly $125 million tax cut but not on food. "I personally think we need to adjust the income tax rate," he said, adding that he will vote against HB 109.
Republican Sen. Beverly Evans, who represents Park City and Snyderville, also opposes the bill, which the Senate received Friday.
"I hope that [food tax] bill gets killed," said Summit County Commissioner Ken Woolstenhulme, who owns the Oakley grocery and dry goods store Ken’s Kash. "You ought to try running a business and then separating the taxes." Summit County’s Representatives, Republican David Ure and Ross Romero, a Democrat, voted to repeal the food tax. "Clearly, this is a year where we have a tremendous surplus and it’s an opportunity for us to give back to everybody," Romero said. "Where it disproportionately affects those in most need, it seemed like the right thing to do at the right time."
Many of Utah’s poor, however, use food stamps, which are exempt from sales tax, Christensen countered. "We want a tax cut some place but the food tax is just not the place to do it," the senator said. "I have talked to so many House members that said, yes, they voted for it because they knew the Senate was going to kill it passed the buck so to speak."
The 4.75 percent paid on food in the state is one of the only taxes some citizens pay, said Sen. David Thomas, R-South Weber. Thomas is also a deputy Summit County attorney. "All of the tourists that stop by in our cities, that’s the only tax they end up paying," Christensen said.
Park City Mayor Dana Williams agrees. "In a tourist economy, the loss of sales tax on food would be absolutely huge," Williams said recently.
Gov. Jon Huntsman Jr. is pushing the Legislature to repeal the food tax while some senators reportedly support a tax credit program for low-income families that could equal $75 million. Meanwhile, because municipalities bond against sales tax revenue to fund projects, taking away that pot of money "will endanger their bond ratings," Christensen said. "It creates a nightmare," the senator added.
After Summit County’s and its municipalities’ share of the food tax is factored in, the area risks losing about seven percent of its sales tax revenue if it’s repealed, Summit County Auditor Blake Frazier said. "It’s a problem and we’re going to have to deal with it," Schmidt said. "As far as a solution, I don’t have one right at the moment."
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Utah’s legislative general session is set to end on Friday, and if history is any indicator, there will be a flurry of floor amendments and last-minute changes for county officials to monitor.