Review panel wants to reinstate sales tax on food

The state's Tax Review Commission on Thursday became the latest advocate for reinstating the full sales tax on food less than two years after it was cut at the prompting of former Gov. Jon Huntsman Jr.

The panel that advises the governor and Legislature on tax policy said the 1.75 percent grocery tax should be returned to the general sales tax rate of 4.75. The commission's recommendation is in line with that of the Salt Lake Area Chamber of Commerce and the Utah Taxpayers Association.

But it was sharply criticized by low-income advocates, even though the panel's 7-5 recommendation came with a caveat -- that there be some relief valve to help ensure Utah's financially challenged families continue getting a break on food.

Rep. Christine Johnson, D-Salt Lake City, a member of the commission, said she found the proposal disconcerting.

"It gives me a great deal of heartburn," Johnson said. "Thirty-five thousand constituents would have my head if I increased the sales tax on food."

Like the other groups endorsing the idea of restoring the full food sales tax, the commission said it sought to create a more stable, sound tax base and was not motivated by the desire to increase revenues to help plug an estimated $850 million budget deficit.

"In my mind, the real issue -- in spite of the emotional effects -- is efficiency," said Commission Chairman Keith Prescott. "There's an efficiency issue that doesn't reach its target

audience. By taking the sales tax off food, it gives too much benefit to the wealthy -- an unintended, not well-thought-out result of what we got."

While consumers have enjoyed the reduced sales tax on food, implemented in January of last year, state coffers have missed out on an estimated $160 million in revenues.

The commission preferred revenue refunds that would be cost-effective and easy to implement. Several options were discussed, such as tying the benefit to the federal earned income tax credit, adding a few lines on the state's tax return or increasing the pool of food stamps.

Low-income advocates, however, panned the plan.

"People are struggling to feed their families," said Linda Hilton of the Coalition of Religious Communities. "It is unconscionable to raise the sales tax on food."

"There is no good way to mitigate," Hilton added. "People I work with are living paycheck to paycheck. They need money back at the register, not next spring."

Commissioner Janis Dubno, an analyst for Voices for Utah Children, shared Hilton's concerns, but strongly favored reinstating the food tax.

"The majority of the benefit is going to upper-end people," Dubno said. "In fact, we're reducing general fund revenues and ... low-income programs get cut as a result."

cmckitrick@sltrib.com