Governor, legislature announce deal to repeal increased Utah food tax

SALT LAKE CITY — Gov. Gary Herbert and the leaders of the Utah House and Senate say they will repeal an increase in the Utah food tax, enacted in a special session just last month, as their first order of business when the 2020 legislative session begins next week.

That announcement also affects the full tax reform package, S.B. 2001.

In a statement, Herbert, Senate President J. Stuart Adams and House Speaker Brad Wilson, all Republicans, said:

In recent weeks, it has become clear that many people have strong concerns regarding legislation passed in December to restructure and revise our tax code. They expressed their concerns by signing a petition to include a referendum on the ballot later this year. We applaud those who have engaged in the civic process and made their voices heard…

When the 2020 general legislative session opens Monday, legislative leaders will introduce a bill to repeal the changes made in the special session. The intention is that the bill will be ready for the governor’s signature before the completion of the first week of the session.

Voter backlash leads to change

Organizers of a voter-led effort to repeal the Utah food tax through a ballot initiative next fall announced earlier this week they had gathered more than 152,000 signatures, well over the number they needed. Volunteers spent days collecting signatures at area grocery stores and spreading the word on social media about their efforts.

In his monthly news conference, Herbert told reporters opposition to an increased food tax was a driving factor toward the full repeal.

“I think the increased sales tax on food was really the catalyst that drove this issue,” he said. “We need to see what we can do to bring people together and find a better way that people can agree to.”

On Dave & Dujanovic, Wilson, the House Speaker, said he didn’t fault residents for their objections.

“The truth is, at least a segment of the public didn’t like the solutions we came up with. That’s okay, that’s part of the process, really,” he said. “We’ll come back in the future, and fix this problem, and some day get that tax cut that I think is important.”

As of Thursday morning, state elections officials said they had verified more than 80,000 of those signatures. On Wednesday, a state elections official told KSL NewsRadio the rate of verification was much higher than that of previous voter initiatives.

Vulnerability in the law

The tax reform approved by lawmakers in the December special session would have been vulnerable to a voter referendum because it did not gain the support of more than two-thirds majority in the state House and Senate. Under state law, that meant it could not take effect for 60 days, giving opponents to the tax reform package time to collect those signatures.

Wilson said it was clear the increase to the state’s food tax was a major sticking point.

“That definitely was the lightning rod,” he said Thursday. “It’s so complex, and we drafted a complex solution. The truth is, the sales tax on food was more than offset in a number of different areas. But the people said they didn’t like it.”

Lawmakers approved the tax reform package as a means to fix what many see as an uneven budget. Under the Utah constitution, income taxes must go solely to education in the state. The other main source of revenue for the state budget is sales taxes. As consumers shift their spending more toward services rather than goods, supporters of the tax reform plan saw it as a way to adjust for lagging growth in sales tax revenue.

Effort to repeal the Utah food tax

The tax reform package included a lot of items, but much of the voter anger was directed at the increased food tax. It would have raised the sales tax on food from 1.75% to 4.85%.

As recently as Wednesday, even some state lawmakers signaled their support for a repeal of the Utah food tax.

“I think repeal should be on the table,” Sen. Dan McCay, R-Riverton, told Dave and Dujanovic. “I hear a lot of consternation about the food tax.”

McCay told the talk show hosts he’d heard similar interest from “a number of colleagues.”

What the repeal means

The announcement from the governor and state legislative leaders means more than the food tax gets rolled back. The entire tax reform package, which reduces income taxes but raises taxes on not just food but also gas and some services, such as hair cuts, dog training and even legal advice, is part of S.B. 2001, the special session legislation.

In the statement, Herbert, Stuart and Wilson point out the underlying problems that led to the special session remain in place.

“The original challenge we worked to address lies before us still. Crafting the right policy is critical to our state’s long-term success. Utah has never shrunk from a challenge and, working together, we will chart the right path forward,” the statement said.

Senate President Stuart Adams indicated he’s eager to keep looking for solutions. But that might wait until after the election.

“I think we’ll wait for a new governor to come in, and I’ll be curious to see what their solutions are,” he said on Dave and Dujanovic.

Herbert hosts a monthly talk show on KSL NewsRadio, which was already planned to air Thursday afternoon at noon. Interested residents can call in to pose questions to the governor at 801-575-TALK (8255).