2017 Interim Session – Tax Reform Update

Revenue and Taxation Interim Committee

Tax Reform. Prepare to hear a lot about this topic over the coming year because reforming Utah’s tax system is perhaps the most important goal for legislators during this Interim Session and the upcoming 2018 General Session. And for good reason — as Senate President Niederhauser pointed out during his remarks at the beginning of this committee meeting, Utah’s population is supposed to double by 2050.

Our state is already struggling to pay for schools, healthcare, and other needs even without such a dramatic population increase. Without a change in the way our state raises revenue, our state will not be able to have the proper environment for good jobs and a high quality of life. As Niederhauser said, “Our tax structure is not where it needs to be to meet these goals.”

Most of the news on tax reform this past session was about lawmakers’ proposal to raise the sales tax on food. For this reason, it comes as no surprise that a group of concerned citizens were outside the committee room as people were filing in, handing out flyers on the dangers of raising this tax. In fact, a reverend from the Coalition for Religious Communities testified during the meeting and advocated for taking away the sales tax on food completely, an idea that certain committee members pushed back against almost immediately. However, it seems unlikely that lawmakers will take a serious look at this tax again — after the major backlash from constituents earlier this year, lawmakers backed off claiming that the sales tax on food would not bring in much revenue after all.

On the other hand, it does seem like legislators will look at tweaking the gas tax again. As Rep. Stanard pointed out, Utah’s current system for taxing gasoline might not be sustainable. This is because of the growing use of electric and other non-fossil fuel vehicles that will still be using the roads but not bringing in revenue to pay for those roads. Senator Stephenson said lawmakers might want to consider looking at the solution Oregon has been using, where people are taxed on the total number of miles driven, rather than on the fuel used to drive those miles. It will be interesting to see if this ends up coming to Utah.

The main takeaway from the committee meeting is that all options seem to be on the table — a sentiment echoed by both Republicans and Democrats on the committee. From looking at property taxes to taxes on the service industry, lawmakers will be looking at a variety of tax methods to bring more money into state coffers. At the end of the meeting, lawmakers opened up a ton of bill files, so we will continue to monitor this committee over the coming months to see how they fill them up. Stay tuned!

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