Utah’s tax overhaul bill: Here’s how it affects you

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SALT LAKE CITY, Utah (ABC4 News) – A bill that would cut income taxes, raise taxes on food, gas and some other services, was introduced on Capitol Hill Thursday by the Utah State Legislature’s Tax Reform Task Force.

The 182-page bill was released, in draft form, about six hours before Thursday’s scheduled hearing at 4:00 p.m.

According to the bill, if passed, it would increase sales tax revenue in the state by approximately $570 million and decrease the income tax revenue by $650 million.

Here are some of the highlights from the bill:

  • The state sales tax on food is increased from 1.75% to the full 4.85% state rate
  • Restores the full sales tax rate on unprepared food
  • Grocery tax credits are offered for low-to-middle-income residents
  • Reduces individual and corporate income tax rates
  • Exempts feminine hygiene products from sales tax
  • Increases the State Motor Vehicle Income Tax
  • Creates new excise ta on diesel 
  • Creates an income tax credit for Social Security income
  • Creates a state earned income tax credit
  • Implements a sales tax for services, such as, but not limited to, landscaping, painting, cleaning, veterinary services, taxi and limousine services, ride-sharing, tourism, streaming media, etc.
  • Tax exemptions for things like newspaper subscriptions, textbooks, college athletic event admission, electricity for ski lifts, etc., are repealed.

Utahns Against Hunger sent ABC4 News the following statement:

As Utahns Against Hunger reviews the draft Task Force Tax Restructuring Policy Proposal we are disappointed to see the inclusion of the full restoration of the state portion on the sales tax on food.

Utahns Against Hunger remains opposed to increasing the sales tax on food and reiterates our concerns we have communicated to the Task Force.

Research has shown that taxing groceries increases food insecurity and hurts household budgets for low and middle income households. 1 in 6 Utah households with children experience food insecurity and 363,000 Utahns are food insecure. This policy would increase food insecurity in young, rural households with children and will be a step back from the years of work the Utah Legislature has done to address poverty. Research shows that food insecurity harms health outcomes, long term health quality in adults and especially children, educational attainment, housing stability and several other social determinates that put families in crisis. 

Furthermore, we confirm our opposition to the Grocery Tax Credit. States that currently employ grocery tax credits, like Idaho and Kansas, have attempted to eliminate both the sales tax on food and the grocery tax credit. For more than 30 years, many states have tried grocery tax credits, only to eliminate them in favor of a grocery tax exemption. This policy concept has been tested and found wanting, as these credits do not deliver their intended recipients.

Previous attempts to overhaul Utah’s tax code have failed.

The Tax Reform Task Force is asking for the bill to be passed during a special session in December.

The next public hearing is scheduled for November 21.

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