Earlier this year, the Utah Legislature took a stab at tax reform with House Bill 441, which was abandoned because of public outcry over the ramifications of rushing through a large tax overhaul. In response to concerns and to gather the feedback of Utah individuals and businesses, the legislature established the Tax Restructuring and Equalization Task Force.

Over the summer, we watched as the task force held eight public forums around the state. During these sessions, teachers, small business owners, economists and every-day Utahns spoke up to share their concerns about how changes to the current tax structure will affect businesses, families and households’ bottom lines. Again and again, in each discussion one thing became clear — a tax on services will create an unreasonable burden on Utahns and stifle business in the state.

In today’s modern economy, state leaders must understand the hyper-competitive reality of the business world. Service-oriented companies compete not only with their neighboring businesses down the street but with the entire sector that is only a click away.

The laundry list of items that would be covered by a tax on services will hit both consumers and businesses in ways they might not initially anticipate. For instance, a tax on services would mean that haircuts, piano lessons, an emergency call to a plumber, tax filing by an accountant, health insurance premiums and even a visit to the doctor would have an extra fee tacked on.

Take a look at professional services, which includes the consultation of a lawyer, the work of a certified public accountant, or even an IT consultant. While these services are sometimes used directly by consumers, they are used frequently by businesses, and additional state taxes on their purchases will trickle down to the consumer in the end in the form of higher prices.

Raising taxes on services will not only affect families and their budgets, but also it will hurt Utah businesses and ultimately their workers. A tax on professional services in the state will make Utah service providers less competitive. And Utah’s small businesses will bear the brunt of these increased taxes, as large firms can avoid the tax by bringing lawyers and accountants in house, or choosing to have the work done in another state.

Small businesses don’t have the same options and will be the most adversely impacted. A tax on services is not helpful to the growth of our modern economy — in fact, it’s counterproductive.

Pro-business and consumer groups and economists have weighed in since this tax increase was proposed earlier this year. Americans for Tax Reform (ATR) has long advocated against burdensome tax increases, and ATR President Grover Norquist noted in March that House Bill 441 would “impose a massive tax increase on the hardworking people of Utah.”

On Wednesday, the Legislature’s Revenue and Taxation Interim Committee will hear an update from the Tax Restructuring and Equalization Task Force. We applaud the work the task force has done, and we hope the interim committee makes clear they will not support policies that fail to acknowledge competition beyond state lines in the internet age. It is clear that a tax on services in Utah will make Utah businesses less competitive and harm families and small business owners in the state.

Joe Rinzel | Americans for a Modern Economy

Joe Rinzel is the executive director of the Americans for a Modern Economy, a national consumer advocacy group focused on modernizing antiquated regulations and laws governing the U.S. economy, based in Washington, D.C.