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Judge tosses legal challenge to Utah's restaurant tax
This is an archived article that was published on sltrib.com in 2012, and information in the article may be outdated. It is provided only for personal research purposes and may not be reprinted.

A district judge has tossed out a legal challenge of the state's restaurant tax, saying the surcharge doesn't give retail establishments an unfair advantage over restaurants that sell the same food and drink.

"There is no evidence that the restaurant tax is driving customer behavior or that restaurants are losing business to competitors because of the tax," 3rd District Judge John Paul Kennedy said in a ruling issued Wednesday.

The tax allows for a 1 percent county-option surcharge on all prepared foods and beverages sold for immediate consumption. It applies only to restaurants and not to retail stores, even if they sell they same goods.

Utah's Restaurant Association and the Utah Taxpayers Association sued over the tax in 2010, arguing that it violates equal protection provisions of the Utah and U.S. constitutions by unfairly levying different tax rates on the same goods, depending on where they were purchased.

Twenty-seven of Utah's 29 counties impose the tax, which generates about $34 million annually to help governments promote tourism, build convention centers and fund an array of community arts, culture and recreation programs.

In court papers, attorneys for the restaurant and taxpayers associations argued that businesses selling the same goods for the same purpose — immediate consumption — should be treated equally and said retail stores get an unfair advantage under the law.

Kennedy disagreed, saying that despite some overlap in the types of products sold, or the competitive nature of the prepared foods market, the association had failed to prove it had been harmed or that the law presents an unreasonable burden.

Kennedy conceded that the classification in state law that defines the different types of establishments isn't perfect — "some retail establishments might be excluded that could logically be included and some restaurants could be included that could logically be excluded."

Still the judge said the classification is not discriminatory.

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