SALT LAKE CITY (AP) - Utah lawmakers have approved lowering the state’s income tax while increasing taxes on food, fuel and a list of services in a sweeping, contentious tax-change package.
The plan passed the GOP-dominated legislature in a special session Thursday after last-minute changes in response to concerns that the increased food tax would hurt low-income people. Lawmakers now plan to send out checks to those residents to balance out the effect.
Still, the bill didn’t reach a two-thirds majority in either the House or Senate, so it could be challenged by a citizen referendum and may not go into effect immediately, the Salt Lake Tribune reported. The overall tax cut is expected to add up to a total of $160 million.
Gov. Gary Herbert has pushed for what he calls tax reform to address a shrinking sales-tax base. He said he planned to sign the bill that cuts the income tax rate from 4.95% to 4.66%.
“Creating a stable system does not necessarily mean collecting more tax revenue. It means collecting the same amount of taxes overall - or maybe even a lower amount - but from a wider segment of the economy, in a more fair and equitable manner. That’s what this bill does,” Herbert said.
Republican Rep. Jeff Stenquist of Draper called the package perhaps “the largest tax cut in the history of the state of Utah,” the Deseret News reported.
The food tax, though, would increase from 1.75% to the full 4.85% state sales tax rate.
Critics say that change would fall hardest on people least about to afford it. For people who are struggling, even a few more dollars could mean “the difference between a gallon of milk or diapers for their babies,” Salt Lake City Democratic Sen. Luz Escamilla said.
Lawmakers responded to those concerns by adding a provision giving lower-income people with dependents a one-time check for up to $200 early next year. Many of them will also receive a grocery tax credit after the full sales tax is restored, though advocates worry extra steps mean many won’t see the same savings. Several candidates for governor in Utah, including Jon Huntsman Jr., have said they are against raising the food tax.
The plan would also apply new taxes to gas as well as certain services, such as streaming media, ride-sharing apps, pet care and dating sites. Previous versions of the plan would have taxed more services, but the list was trimmed during the process.
Lawmakers considered one other bill in the special session for behavioral health services. The bill, which passed with no opposition, moved $3.9 million from unused appropriations for Medicaid Expansion, due to low Medicaid enrollment, to provide funding for behavioral health treatment at the request of county health departments.
Please read our comment policy before commenting.