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After school leaders, taxpayer watchdogs and advocates for the poor all griped in a hearing Thursday about a bill to restore sales taxes on food that were lowered three years ago, the sponsor decided to take it back to the drawing board.
But Rep. Mike Noel, R-Kanab, says he still plans to push to raise the sales tax on food. But instead of using it as a means to lower property taxes by an equal amount as first intended, he now plans to use it to lower sales taxes on other items besides food.
"That's even worse," said Steve Erickson, with the Crossroads Urban Center that advocates for low-income people. "That means the poor will pay more for food so that tax breaks will go to people who buy Ferraris or a yacht on the Great Salt Lake."
Noel asked the House Revenue and Taxation Committee not to vote on his HB72 so he can rework it.
The statewide sales tax for items besides food is currently 4.7 percent (not counting local sales taxes). The state portion of sales tax on food statewide is lower, 1.75 percent (and local governments also charge another 1.25 percent on food in most areas). Former Gov. Jon Huntsman Jr. fought hard to lower sales tax on food to help the poor.
Noel, who had voted for that change, told the committee that some lawmakers now feel that was a mistake. He initially proposed to raise it back, and use the $147.4 million it would generate to lower by an equal amount state property taxes for schools. Noel said property taxes are hard on the elderly and those on fixed incomes, and he wanted to give them some relief.
But that brought protests from the Utah Education Association, the Utah Taxpayers Association and groups representing school districts and superintendents — who said they rarely agree on anything.
"Educators oppose moving from a more stable tax base to a less stable tax base," said Kory Holdaway, a former legislator lobbying for the Utah Education Association. He said sales taxes may dive in a depression and hurt schools, while property taxes are stable. The other groups agreed.
Largely because of that, Noel told reporters he is now considering restoring sales taxes on food to lower sales taxes on other items. That may make educators happy, but it still did not please advocates for the poor.
For example, Gina Cornia, executive director for Utahns Against Hunger, said the tax hike on essential food could be the difference between making it from paycheck to paycheck, or visiting a pantry for emergency food help.
But Noel said lowering sales taxes on other items could help the poor, too. "You can't live without dish soap. You can't live without toilet paper. Let's just say there are things out there that you've got to have," Noel said.
Also, he said he would consider including in his bill creation of an income tax credit to help those in poverty to afford the higher sales tax on food.
Noel said sales tax on food is fairly stable, but sales tax on other items vary with the economy. Also, he said the shift would allow rural areas such as his district to capture more sales tax from tourists as they buy food.