A Republican lawmaker said he would propose eliminating the state’s portion of sales taxes on food while raising the sales tax on other goods to keep the flow of revenue steady.
Colleagues on a legislative committee expressed interest in the idea Wednesday, as legislators continued to circle around tax reform as a top priority.
Rep. Tim Quinn, R-Heber City, became the first majority party member to propose a bill, though a draft hasn’t been released and still needs to be fleshed out.
“For those who are on fixed incomes, or those newly married couples that haven’t established themselves economically, a disproportionate amount of their income is spent on food,” Quinn said. “If we can eliminate that and help them in a small way, and it is, it’s a small way, but I think it’s the right way.”
Members of the Revenue and Taxation Interim Committee received new estimates from legislative economists showing how the state could change taxes without increasing or shrinking its revenue stream.
If legislators eliminated the state’s food tax, they’d have to raise the sales tax on other items from the current 4.7 percent to 4.94 percent to balance the budget, the economists said.
They could also tax unhealthy food items like candy and soda, along with bottled water and dietary supplements, at the rate other goods are taxed, a hike that would bring in nearly $30 million a year.
Utah lowered its tax on food from 4.7 percent to 1.75 percent in 2008. Local governments can add another 1.25 percent tax, bringing the total tax on food to 3 percent. Despite the discounted rate, Utah is in the minority of states that tax food.
Quinn said he had no problem raising the tax on other goods by 0.24 percentage points if the state eliminated the food tax entirely, including on soda, candy, supplements and bottled water.
“For every $100 I spend on things that are not food, it’s 24 cents,” Quinn said. “It really doesn’t make a big difference in how we spend our discretionary incomes.”
If the bill gains traction at the Capitol, it would signal a stark reversal just months after Republican leaders considered raising the tax on groceries back to 4.7 percent, which they said would make the revenue stream more stable. A deal proposing to restore the full rate fell apart in the final days of the 2017 session.
Sen. Howard Stephenson, a Draper Republican and co-chairman of the interim tax committee, said he prefers tax-code changes that promote job growth.
If lawmakers move to change the way Utah taxes food, Stephenson said, he’s not interested in a system that singles out items like candy, water and supplements.
“It might be better to restore it fully or eliminate it fully,” said Stephenson, head of the business-backed Utah Taxpayers Association.
Supporters of eliminating the food tax took Quinn’s bill file and other recent statements by lawmakers as signals that legislators might make buying food cheaper.
“You’ve got somebody who last month talked about this hypothetically who now has a bill file,” said Bill Tibbitts, associate director of the Crossroads Urban Center and a tireless advocate for eliminating the food tax.
Sen. Jim Dabakis, D-Salt Lake City, said the activity signaled there was “momentum” for eliminating the state’s grocery tax. He’s also interested in finding a way to get rid of the local option and bringing the total tax on food to zero.
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