State’s big tax reform bill roars out of a legislative committee. Next stop: the chamber floor.

(Rick Egan | The Salt Lake Tribune) Rep. Tim Quinn introduces the new sweeping tax overhaul bill during it's first public hearing in a committee meeting, Friday, March 1, 2019.

A hefty tax overhaul bill is headed to the Utah House floor after receiving strong support from members of a legislative panel Friday afternoon.

But the legislation wasn’t so popular with the parade of business representatives who testified on it ahead of the vote.

Attorneys, broadcasters, accountants and tax advocates packed the House Revenue and Taxation Committee hearing to speak about the 257-page proposal that has been long-awaited but was only released Wednesday. The measure sponsored by Rep. Tim Quinn, R-Heber City, expands the state’s sales tax to cover a broad array of services, while at the same time reducing sales tax and income tax rates.

The day’s doom-and-gloom predictions began with Jim Ferrin, a former state lawmaker and financial adviser who said it would be a nightmare for him to tack on the sales tax to his Pleasant Grove business’s services. Just keeping track of the different rates applied in various Utah counties would be a headache, he said.

"This is scaring the daylights out of me," he said. "You wonder who are the losers? That's me."

Television and radio broadcasters said saddling advertisers with additional taxes would put a significant dent in their bottom lines.

“This could be the absolute end of of local broadcasting,” said Richard Doutre’ Jones, ABC4 Utah vice president and general manager.

The industry-backed Utah Taxpayers Association was supportive of a reforms package but cautioned against tax pyramiding, or the buildup of tax-related costs along the supply chain.

“This bill in taxing professional services of corporations creates a real problem, and as you know, capital is a coward and it will go where it’s most safe,” Howard Stephenson, the association’s president and a just-retired state senator, said.

But a few business groups spoke up in support of the proposed reforms as a common-sense solution to the state's increasingly outdated tax structure.

“We understand that people will feel the pain in the short term, but lowering the rates and broadening the base is the right solution, and now’s our time,” said Abby Osborne, the Salt Lake Chamber’s vice president of public policy and government relations.

In the past, more than half of consumer spending was directed toward goods generally covered by the sales tax. But over time, the economy has become less about merchandise and more about service transactions, which are largely outside the umbrella of the sales tax.

Gov. Gary Herbert and state legislative leaders have agreed that they must address the sluggish growth of sales tax revenues, and Quinn said he’s spent the past six months thinking about how to accomplish that goal. In addition to expanding the sales tax to a multitude of services, his bill would tack on a 1 percent tax to health insurance premiums and a .075 percent transfer tax to residential and commercial property sales. It would also drop the sales tax rate to 3.1 percent and the income tax rate to 4.75 percent and provide some tax credits.

Quinn has said the proposal would be revenue-neutral, meaning the state would not collect any more or less revenue overall. He hopes that, as this session’s budget planning progresses, he’ll be able to amend his bill to trim income tax rates even further for an ultimate tax cut.

For a median Utahn — 31 years old, married with one child, earning about $65,000 annually — the proposed changes would save about $634 each year, officials say.

The bill’s fiscal note, released before Friday’s hearing, showed that the suggested income tax reduction would slash revenues going into the state’s education fund by nearly $100 million in fiscal 2020 and $324 million in the two following budget years. However, Quinn said the plan would benefit public education in the long run by ending the state’s reliance on the K-12 fund to pay for an ever-increasing share of higher education costs.

Near the end of Friday’s hearing, Quinn batted down speaker suggestions that the bill is tearing through the Legislature at breakneck speed. He said many of the same people who testified against his bill have no problem asking for state appropriations to be delivered lickety-split.

“Rarely do I hear them say when they’re requesting millions of dollars from us, ‘Take it slow when you make a decision,’” Quinn said. “I know I’m getting a little punchy, but I’ve been getting the crap kicked out of me for the last six months on this bill.”

After a brief discussion, committee members voted 12-2 to pass the bill, HB441, out with a favorable recommendation.