ST. GEORGE — Utah’s taxpayers and grassroots organizations are at odds with the Utah Legislature as they battle against a committee’s tax bill, which was passed in a special session.
Following the approval of the Tax Restructuring and Equalization Task Force’s legislation and subsequent referendums filed in opposition, the Utah Legislative Watch spoke out in support of the remaining referendum during a press conference Monday.
Lawmakers voted to adopt the proposed legislation during a special session Dec. 12, and Gov. Gary Herbert signed the legislation on Dec. 19.
The bill was created to help expand the state’s shrinking sales tax base, address balance issues within the current tax structure and increase flexibility within the general fund as the state tackles issues relating to its growing population.
Task Force legislation
The bill increases sales tax on food from 1.75% to 4.85% with an annual income tax credit of up to $125 per person and an overall decrease in income taxes to lessen the impact the increase would have on households. The bill also includes an increase on the state’s gas tax.
To balance the effect these increases have on low-income families and taxpayers living in rural and southern parts of the state, the legislation also decreases overall income taxes from 4.95% to about 4.64%. Legislators plan to recoup the costs by issuing sales tax on a number of services, including vending machines that accept credit or debit cards and admission to college sporting events.
Legislators expect the bill to generate about $570 million in general fund revenue and decrease income tax revenue by about $650 million.
Shortly after the task force’s decision to adopt the legislation, two citizen referendums were filed in opposition. The referendums seek a public vote and require more than 115,869 signatures to qualify for the ballot.
The first referendum was filed by former state Rep. Fred Cox on Dec. 16. The following day, Steve Maxfield from The People’s Right filed another referendum. Since then, the Lieutenant Governor’s Office has thrown out the second referendum after it was discovered that two of the six sponsors did not vote in the last general election.
Now, The Utah Legislative Watch, Utah Tax Reform Coalition and United Women’s Forum are voicing their support for the remaining referendum. Utah gubernatorial candidates Aimee Winder-Newton and Jeff Burningham were also in attendance to support the referendum.
Gubernatorial candidates weigh in
Burningham told St. George News that he was against the original tax reform legislation, HB441, and was interested to see how it would change as the process played out. When the Tax Restructuring and Equalization Task Force released a draft of the most recent legislation, however, he said he wasn’t thrilled.
From the beginning, he said, Burningham has maintained that the Utah Legislature didn’t have a revenue problem but that it does have a spending problem.
“The State budget has grown over 30% in the last five years,” he said. “That’s over $3 billion. That’s just too much of an increase, in my opinion.”
Last month, Burningham released a video criticizing the tax bill for its role in increasing tax on food and gas. As a young boy, Burningham said he came from meager means, at times having to drink powdered milk in his youth.
Burningham said he remembers wondering why his peers weren’t also drinking powdered milk, feeling less-than and worrying about the future more. His concern, he said, is that there will be more kids in Utah drinking powdered milk in 2020 because their parents are paying more for groceries.
“That’s not the Utah way,” he said. “Sales tax on food hurts the most poor and needy among us. I just don’t think that’s reflective of our state.”
These impacts, he argued, will be felt more immediately in rural and southern parts of the state. Taxpayers in these areas, he said, already pay more for gas than drivers in northern parts of the state. With the added gas tax, the impact will disproportionately affect residents in these areas.
Burningham’s largest point of concern, however, was that through his time listening to the lawmakers during the hearings, little was said about taxpayers.
“I think anytime that we’re thinking about increasing taxes on the people of Utah, they should be the prime focus,” Burningham said. “I thought the questions were all wrong. Instead of asking how this was going to affect legislator’s budget and all of that, we should be talking about how this is going to affect the people of Utah.”
Burningham said legislators need to start over and take a closer look at how they can more efficiently spend taxpayers’ dollars instead of where and how else they can tax Utah residents.
Winder-Newton generally agrees with Burningham and said a lot of her concerns stem from the relatively quick nature of the legislation’s drafting and approval process. The gubernatorial candidate met with taxpayers to discuss the impact the recently passed legislation would have on them, and she said the responses were not what supporters might have expected.
Despite the task force’s listening tour and general openness surrounding the tax reform process, she said those she spoke to aren’t ready to just go along with the reform that has been outlined.
“They are still hungry for more transparency, listening and discussion,” Winder-Newton said in a statement. “They are also hungry for leaders to cut any unnecessary spending.”
The Utah Legislature’s actions surrounding HB441 left taxpayers with a bad taste in their mouth, she said, as lawmakers worked behind closed doors to draft complex legislation, introduced it to the public for only two weeks and expected it to pass.
Winder-Newton outlined three steps that she believes legislators should follow to earn back the trust of state taxpayers: provide more information about the challenges in the current tax system, have more personal conversations with those directly impacted by changes in public policy and count on the citizenry as partners in crafting better policy.
“I believe our legislators are good men and women working in earnest to craft tax policy that they believe is good for Utah,” she said. “They’re willing to tackle an incredibly complex issue, and they’re giving their best effort to it. But this tax reform public process has been hastily undertaken.”
Lt. Gov. Spencer Cox also released a statement disagreeing with Herbert and insisting that more time should be taken. While the state Legislature should be recognized for the time and effort they put into traveling the state and listening to taxpayers’ concerns over the past six months, it does not take away from the fact that a final draft of the bill was only released days before the decision.
Tax reform is a complicated topic, he said, with a great deal of controversy and challenges, and more should have been done to help taxpayers understand the significant changes to policy.
“Admittedly this bill is a significant improvement over previous iterations,” Cox said. “However, I still believe that we can do better.”
Cox is one of four gubernatorial candidates for the 2020 election, and he said his biggest priorities for tax policy would be finding ways to cut government spending, protecting and increasing the investment in education, protecting marginalized populations from adverse effects and respecting Utah’s citizens.
Organizations voice support for tax bill
Rusty Cannon, the vice president of the Utah Taxpayers Association, told St. George News that although the organization opposed HB441, they have wholeheartedly supported more recent legislation. The organization worked throughout the summer and into the fall with legislators to advocate for principles they believed should be included in the bill, and for the most part, he said, they listened.
Cannon said he believes there has been quite a bit of misinformation surrounding the legislation and the Utah Taxpayers Association is working to educate and inform taxpayers.
“Most of the complaints we have seen and heard about the tax bill have come from folks who don’t understand the bill, haven’t read the bill or misunderstand what it does,” he said. “Most of the concerns that we have heard are things that are actually fixed in the tax bill.”
The biggest reason that the organization supports the legislation, however, is the large net tax cut that the bill provides.
The next tax cut, he said, for Utah taxpayers is around $200 million, even with the sales tax on food and the increased gas tax. The bill also restores the dependent exemption that state taxpayers lost after federal tax reform was approved in 2017.
The organization supports the bill despite the increased tax on food and gas because the regressive nature of the imposed tax is dissolved by the $125 annual grocery tax credit.
Despite concerns that the bill will disproportionately affect rural and southern parts of Utah, Cannon said the gas tax should be viewed as more of a user fee. Though the organization understands why drivers who have to go long distances might be concerned, the gas fee ensures that the people who are using the roads more are the ones paying for its maintenance.
“The more you drive, the more you use the roads,” he said. “Therefore, there’s nothing wrong with having a greater user fee, which in this case is a gas tax.”
In the opinion of the Utah Taxpayers Association, the task force has done its due diligence and heard what the residents of Utah have to say, drafting legislation that benefits all of Utah. Cannon said he completely disagrees with the idea that the process was rushed.
With over 60 hours of public meetings and hundreds of meetings between the task force and interested parties, Cannon said the legislation is well thought out and legislators deserve credit for taking a thorough look at how tax restructuring would affect Utah taxpayers.
The reason, he argued, that legislators made the decision in a special session was to ensure income tax cuts would go into effect before sales tax increases, which go into effect April 1.
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