ST. GEORGE — Following weeks of Utah residents gathering signatures and hosting events against the latest tax legislation, Southern Utah lawmakers are offering their perspectives on the potential benefits and disadvantages of SB 2001.
The Tax Restructuring and Equalization Task Force passed legislation during a special session on Dec. 12. This legislation, among other things, increases sales tax on food and gas, implements sales tax on select services and creates a grocery tax cut. Gov. Gary Herbert signed the bill into law on Dec. 19.
Before Herbert signed the bill, two citizen referendums were filed seeking a public vote on the bill. Although the second referendum was thrown out after the Lieutenant Governor’s Office discovered two of the six sponsors did not vote in the last three general elections, the first referendum, filed by former state representative Fred Cox, is still active.
In order for the legislation to qualify for the ballot in November, the referendum is required to collect more than 115,869 signatures. Taxpayers across the state have organized and are participating in signing events at local libraries, homes and businesses to help residents learn more about the legislation and sign the referendum.
With a large number of business owners and residents voicing their concerns, Southern Utah lawmakers are stepping forward to answer questions and protect the legislation they worked tirelessly to create.
Rep. Evan Vickers, R-District 28, and Rep. Bradley Last, R-District 71, told St. George News they spent thousands of hours helping legislators on the Tax Restructuring and Equalization Task Force draft the bill and stand by the finished product.
“At the end of the day, was the bill perfect?” Vickers asked. “No, but it really accomplished some really good things. Unfortunately, the bill is not being portrayed accurately.”
Taxpayers across the state, he said, are not accurately portraying the overall bill on social media sites. The bill offers residents a major tax cut and fixed looming issues by reforming the structure of sales and income tax revenues.
Included in the bill is an overall income tax rate decrease from 4.95% to about 4.66%, creating a $160 million tax cut that could help 86% of Utahns pay fewer annual taxes. Lawmakers approved the largest net tax cut ever given in the state of over $249 million, including $88 million in one-time breaks.
The fact that the bill provides a large tax cut, Last said, is not widely advertised and often ignored.
“If you were to ask the general public why we did this, I think most would say, ‘They wanted to raise our taxes. They wanted to generate more money for the State,’” he said. “That is not what this bill did. This bill is a big tax cut.”
The legislation was created to expand the state’s shrinking sales tax base, address balance issues within the current tax structure and increase flexibility within the general fund as Utah’s population continues to grow.
By extending sales tax to a number of services, including vending machines that accept credit or debit cards and admission to college sporting events, legislators hope to recoup the costs of decreasing overall income tax rate and generate a projected $570 million of general fund revenue.
Most of the focus has been shifted to the increased sales tax on unprepared food. Taxpayers would see a grocery tax increase from 1.75% to 4.85%, although legislators have included an income tax credit of up to $125 per person annually and an overall decrease in income taxes to lessen the impact this change would have on households.
The bill also includes an increase on the state’s gas tax, which proponents of the bill have explained as a user fee, ensuring the people who are using the roads more are the ones paying for its maintenance.
Vickers said the food and gas tax are good talking points to start on, but they are often the only aspect of the bill people focus on.
“If you would just sit down, and instead of working off of emotion, and see what it actually does, you would see that they’re really a lot of positive things in the bill,” he said.
Other than increasing sales tax on food and gas, SB 2001 also re-establishes the dependent child tax exemption that was lost due to the reformation of federal taxes. The bill ensures that about $60 million is returned to Utah taxpayers with dependents in the home, and checks are scheduled to be sent to residents in the first part of the year.
The bill also creates an earned income tax credit for the “working poor” as well as creates tax breaks for residents on Social Security. Residents who are on the lower end of Social Security will have additional tax breaks that will ensure their income is virtually free of income tax.
While some additional services will be taxed, manufacturing and mining equipment will be exempt to help spur the economy, Last said. The tax policies were designed to avoid taxing at multiple levels.
SB 2001 also “holds public education harmless,” Vickers said, by removing the constitutional earmark on income tax, bringing money back from higher education into public education, and replacing income tax revenue with sales tax revenue.
Vickers said he can understand why people are signing the referendum, but he believes the talking points have become muddled.
“People are being enticed to sign a referendum they really don’t know the truth about,” he said. “I don’t blame people for wanting to sign the referendum. I understand. But the challenge is they might be focusing on one aspect. They’re not looking at the overall aspect of what it does and the positive things it does for the state.”
While sales tax on food does hurt the poor, taxpayers don’t realize they’re already paying sales tax on most of the things they buy in a grocery store.
Groceries — such as meat, potatoes, bacon and cheese — are already taxed at the state rate of 1.75%, not including local tax, he said. The bill raises the sales tax to 4.85% but only on groceries. To offset that, money is given back to those who qualify.
Furthermore, the gas tax is a dying tax, Vickers argued. Urban areas of the state require funds for construction and maintenance, and rural parts of Utah are looking for funds to support roadway maintenance. The legislature is struggling to find the money to provide for the state’s needs. Legislators are looking for a way to fund transportation.
Legislators spent thousands of hours debating, researching and going through the process to offer solutions to current and future problems, Vickers said. But he believes all of their work is being undone because of inaccurate information. Vickers has urged residents to look at the overall structure of the bill, take the time to understand its different aspects and “get educated.”
“If they have gone through what I’ve gone through to determine if the bill is a good bill or not, and then they make a different choice than I do, that’s fine,” he said. “That’s not a problem.”
Last told St. George News the biggest hurdle has been communicating such complicated legislation to taxpayers in a way that is concise and understandable. This challenge has been amplified with the involvement of social media.
“Social media has changed the world as we know it, and I think, as a legislature, we’re going to have to realize that when we take on complicated and big policy issues, messaging it is going to have to be a really important part of the process,” he said.
Social media, Last said, has the ability to reach a large number of people quickly — even instantly — and often when a negative aspect of the bill goes out, that’s what gets heard. After their initial exposure, he said, it can be hard to change people’s minds.
The legislature isn’t set up to take a message to the public, Last said, because it doesn’t have the structure to do so. The governor’s office has more capability to deliver messages to residents, and some people, he argued, have suggested that the governor should have been a little bit more involved in the messaging.
Election officials have until March 17 to collect and verify more than 115,869 signatures. If volunteers collect the minimum necessary amount of signatures, the tax bill will be put on hold until residents vote on the legislation in November.
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