TRAC tax in jeopardy in Summit County
February 5, 2008
Only in a place like Park City would so many businesses and people appreciate a tax the restaurant tax, that is. The current one-percent food and restaurant tax in Summit County generates about $1 million, which is put back into the recreational and tourism industry each year.
Now, Sen. Wayne Niederhauser , R-Salt Lake, wants to take that away. Not only from Summit County, but from all counties in Utah, because he believes the current restaurant tax is a waste for restaurants in non-tourist counties in Utah.
"The TRAC (Tourism, Recreation, Cultural, and Convention Facilities) tax was designed to get people from out of the state," Niederhauser said. "[But] 90 percent of restaurant use is by people in the state."
The restaurant tax is a local option for all counties, which are allowed to impose a restaurant tax up to one percent.
After researching the TRAC tax while sponsoring a bill to give a portion of the tax to tourist ad campaigns last year, Niederhauser said he discovered that many Wasatch front counties’ uses for the tax were "very broad." He said, while popular tourist destinations like Summit, Grand and Garfield counties benefit from the restaurant tax, other counties did not need the extra revenue because they cater to mostly locals, not tourists.
That’s when Niederhauser decided to sponsor a new bill to eliminate the current one-percent restaurant tax and replace it with a 0.07 percent increase on all taxable sales.
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Niederhauser ‘s original plan was to make this tax change for all counties in Utah.
However, after receiving opposition to his bill from Utah Association of Counties (UAC), and especially from Summit County, Niederhauser decided to give his bill a second glance.
"I think it would be disastrous," said Summit County Commissioner Sally Elliott. "At a 0.07 [percent sales tax increase], every county gets an increase except Summit County."
Niederhauser agrees that his original idea to cut the restaurant tax across the board and increase the sales tax by 0.07 percent could negatively impact counties where the tourist and restaurant industries are thriving.
"I have discovered there are some counties that are winners and losers," he said in regards to his bill.
Elliott argues that Summit County is of the few counties in Utah that benefits from the restaurant tax, and said eliminating it would mean less money for tourism and recreation industries in Summit County. She said, if the bill passes, the county would lose more than $600,000 in the revenue currently generated from the TRAC tax each year.
"$665,000 is a huge chunk of our restaurant sales tax," Elliott said. "It would mean that we’re not able to build the same kind of tourism infrastructure projects that we’ve been able to do in the past."
Des Barker, lobbyist for the Park City Chamber/Bureau, said he agrees.
"Summit County would be the hardest hit out of that proposal," Barker said. "Summit County has been one of the few counties that actually utilizes the restaurant tax in the manner in which in which it was originally intended."
Niederhauser said, after speaking with several members of UAC and Summit County officials he decided to "tweak" his bill a little, and is now devising a strategy to enable Summit County to generate the same amount of revenue from the restaurant tax each year through the increased sales tax.
"I’m not looking to hurt Summit County," he said. "They brought that to my attention and I’m going to fix that."
Niederhauser said, while counties would adopt the new 0.07 percent increase in the sales tax and lose the restaurant tax, he would come up with a way to allow Summit County to generate the same amount of money it generated from the restaurant tax each year. He said, even if the sales tax in Summit County changes in the future, he hopes to devise a strategy to keep the same revenue coming into Summit County each year to support the tourist industry.
"We’re trying to come up with a formula to benefit everyone," Niederhauser said. "We may have to tweak that formula in years to come."
Until then, Elliott said she does not agree with an increased sales tax, either.
"The second problem is that the general sales tax is a regressive tax in that it applies to socks and shoes for poor children as much as it does to someone eating a $75 plate at a restaurant," Elliot said. "It’s an unfair tax because those restaurant taxes pay for construction for recreation."
Barker reiterated that the current restaurant tax is important to the tourism industry in Summit County.
"We have high number of restaurant sales and high number of visitors," Barker said. "It’s difficult, because we’re one of the few counties that it would be a net loss for."
Barker said, as a lobbyist for the Chamber/Bureau, he is pushing for more bills to increase general tourism promotion dollars, something he said the Chamber/Bureau has supported the last several years.
He said he is also paying close attention to immigration issues on the Hill.
"We have large portion of our workforce in the restaurant and hospitality industry," Barker said. "We’re watching on all reform issues. My understanding is we think it’s a federal issue and [not a state-by-state issue]."
Niederhauser denies sponsoring his new bill with the motive to build a Broadway-style theater in Sandy, where he is from, which several reports have indicated. He said, while he knows Sandy is interested in building a new theater, he is not endorsing it and did not create the bill for that purpose. He said he started working on the bill last April and will finalize the wording in the next couple of days.
For more information or updates on this bill and others at the Legislature, visit http://www.le.state.ut.us.