SALT LAKE CITY — A sweeping plan unveiled by Utah legislators Friday would reduce overall state taxes by $75 million, cutting income taxes while boosting sales taxes on food, fuel and other items.
The proposal is the product of the Tax Restructuring and Equalization Task Force, which held hearings around the state to gauge public opinion on a range of options.
The task force co-chairmen, Sen. Lyle Hillyard, R-Logan, and Rep. Francis Gibson, R-Mapleton, said in an executive summary that their plan would remove the sales tax break on food. Groceries are taxed at 1.75%, but the task force plan would subject them to the full sales tax rate, 4.85%.
Two income tax measures would soften that impact on low- and fixed-income residents, Hillyard and Gibson said.
First, a grocery tax credit of $100 per household member could be claimed. Also, a new tax credit for Social Security income would be granted, equal to total Social Security income included under the adjusted gross income total on state tax returns.
The plan also would boost the income tax deduction for dependents to $2,500 per dependent. The current rate is $565.
The sales tax plan additionally would eliminate the state sales tax exemption on gasoline and diesel, meaning the state would begin imposing the 4.85% sales tax at the distributor level on the wholesale price of fuel.
Meanwhile, a host of services now exempt from sales tax would be taxed. Examples include veterinary services, taxis and ride sharing, newspaper publishing, yoga and other instruction, wedding planning, and shipping and handling.
College sports tickets, car washes, alternative energy sources, some textbooks, electricity for ski lifts and some construction materials would become subject to sales tax.
Hillyard and Gibson also proposed that the income tax rate for individuals and businesses be dropped by 0.25%.
Their summary said higher education funding would be moved into the state general fund, where public education is funded. They said public school funding would be “held harmless” in the restructuring.
The task force came about after lawmakers considered and dropped a massive restructuring during the 2019 general session. The Hillyard-Gibson plan is supposed to fix the state’s “structural revenue imbalance” and would give legislators more flexibility in funding programs, they said.
“I’m glad to have this initial proposal public now so we can begin to scrutinize and find areas of concern,” Hillyard said in a prepared statement. “Our guiding principles have been and continue to be to find the best tax policy structure to support our growing economy for years to come.”
The task force has scheduled meetings at the Utah Capitol for 4:30 p.m. Tuesday, 4 p.m. Nov. 7 and 5 p.m. Nov. 21. The group then will present a revised plan to the Legislature.