After the Utah House approved wiping out the state sales tax on food, the Senate made quick work of the reform — defeating the measure in its first committee hearing before ever reaching the floor for debate.
HB148 was rejected by a 4-2 margin Monday, the final day for committee hearings.
The bill had won bipartisan approval in the House on a 42-27 vote two weeks ago. But it had languished in the Senate until its defeat in the Senate Revenue and Taxation Committee.
All four opposing votes were from Republicans, while GOP Sen. Deidre Henderson of Spanish Fork joined Democric Sen. Jim Dabakis in supporting HB148.
Sens. Curt Bramble, Lincoln Fillmore, Daniel Hemmert and Howard Stephenson opposed HB148.
Feb. 20: Utah House votes to eliminate state sales tax on food — bill now goes to the Senate
Just a year after legislators seriously considered raising the sales tax on food, the Utah House voted 42-27 on Tuesday to eliminate the state’s share of the levy.
Representatives passed HB148 to erase the state’s current 1.7 percent sales tax on unprepared foods. But it would raise the state’s portion of sales tax on everything else from 4.7 percent to 4.92 percent. The bill now goes to the Senate.
Local sales tax on food would remain unchanged if the bill passes.
Overall, legislative analysts estimate that state sales tax revenue would remain the same under the proposal. But Rep. Tim Quinn, R-Heber City, the bill’s sponsor, said it would help low-income people who spend much higher percentages of their income on food.
Quinn said the resulting increase on non-food items would cost $2.20 more for every $1,000 spent. That’s “a trade-off I’m willing to make, and I think is the right trade-off to make, to help those who are less unfortunate.”
Sales tax is one of the few taxes that people can choose whether to pay, by deciding what purchases to make, he said. “But when it comes to food, we don’t have that choice.”
Quinn noted the state does not charge sales tax on prescription drugs “because many of us take those prescription drugs to live. Don’t we do the same thing with food?”
He said, “Most of us in the state of Utah spend 8 percent of our disposable income on unprepared foods. Many in society, particularly the elderly who are on fixed incomes, can spend up to 35 to 40 percent…. That’s a disproportionate amount they are spending on an item they are required to have.”
Last year, legislators considered raising the sales tax on food because it was seen as a stable source of income during recessions and downturns. But Quinn said studies showed that food was such a relatively small portion of all purchases that it would have little effect on tax revenue volatility.
Rep. Scott Sandall, R-Tremonton, was among opponents to the bill. He said it narrows the tax base and raises the rate for most items. “It is the wrong policy.”
But Rep. Sandra Hollins, D-Salt Lake City, called it “the right thing to do.”
Hollins, a social worker, said she recently found an elderly woman with no food in her house because she had to decide “between food or medication.”
Feb. 8: Could Utah’s sales tax on food vanish?
Just a year ago, Utah lawmakers were pushing to raise the state’s sales tax on food. Now some are looking at eliminating it, as 35 other states already have.
The House Revenue and Taxation Committee voted 8-3 on Wednesday to endorse HB148, which would totally abolish the state’s 1.7 percent sales tax on unprepared foods.
But it would raise the state’s portion of sales tax on everything else from the current 4.7 percent to 4.92 percent.
Overall, legislative analysts estimate that state sales tax revenue would remain the same. But Rep. Tim Quinn, R-Heber City, said the change would help low-income people who spend much higher percentages of their income on food.
“To me, it’s not an economic issue. It’s a moral issue,” Quinn said. “That is a trade-off I think we should all make to help those are struggling,” noting that while most people average spending about 7 percent of their income on food, the poor often spend 35 percent or more.
A long line of groups representing the poor testified in favor of the bill.
“This bill would provide some measure of relief to those families that can least afford to put food on their table,” said Bill Germundson, of Make Hunger Visible. “We have a great opportunity here to make the great state of Utah a more compassionate place to live.”
Melissa Jensen, with Utahns Against Hunger, said, “Taxing food increases food insecurity in the state,” and mean that more people do not have enough to eat.
But others opposed the bill.
Billy Hesterman, vice president of the Utah Taxpayers Association, said his group prefers to broaden the tax base to lower rates, while this bill does the opposite.
Rep. Doug Sagers, R-Tooele, said that when the recession hit, overall sales tax revenues plummeted, making it difficult to fund government programs. He said food sales are fairly constant even in hard times, so eliminating them could lead to more volatility and less stability for government funding.
The committee made one change to the bill. It decided to tax candy at the full tax rate. It has up to now received the same discount as unprepared foods.
Committee Chairman Steve Eliason, R-Sandy, made that motion in part because it helped achieve revenue neutrality in the bill, and he said he wanted to send a “public health message” — saying diabetes, for example, is becoming an increasing problem in Utah so such foods should not get a tax break.
The bill now goes to the full House for consideration.