Governor pitches plan to tax more services, cut overall rate
SALT LAKE CITY (AP) — Utah Gov. Gary Herbert pitched his plan of adding new sales taxes while cutting the overall rate to a taxpayers’ group on Monday, foreshadowing an issue that could be contentious during the upcoming legislative session.
The Republican Herbert told the Utah Taxpayers Association that economic changes have significantly narrowed the sales tax base, and now is the time to act.
“We cannot kick this can down the road much longer,” Herbert said.
He wants to lower the overall sales tax rate from 4.85 percent to less than 4 percent, which could save taxpayers a total of about $200 million.
Services that could see new taxes range from limousine rentals to haircuts, pest control and plastic surgery.
Herbert said he does not necessarily want to increase the sales tax on food, which is lower than on other goods, but that it’s up for discussion.
The Utah Taxpayers Association advocates for limited taxes, but nevertheless supports much of Herbert’s proposal as sound policy, as long as it doesn’t raise taxes overall. President Howard Stephenson, though, said he disagrees on one point: He wants to cut the income tax rather than lowering the sales tax.
“That’s the thing people look at when they’re considering re-locating in the state,” Stephenson said, pointing to neighbors like Nevada that have no state income tax. Utah collects an income tax of just under five percent.
Incoming Utah House Speaker Brad Wilson, a Republican, also signaled support for the general idea.
“The way we fund government isn’t working anymore,” he said.
Wilson expects some contention over the details. Lawmakers have some ideas different from the governor’s plan, and industries potentially subject to new taxes will also likely weigh in as the legislative session begins Jan. 28.