Is half a sales tax on food better than a full taxfi That is the compromise that came out of this year's legislative session.
One of Gov. Huntsman's goals was eliminating the sales tax on food. Critics have rightly called it a regressive tax on the grounds that Utah's working poor spend a higher percentage of their incomes on groceries than do others who make more money.
But in a state where many of the people and politicians consider tax a four-letter word, the food tax was a revenue stream that legislators were reluctant to block. Some argued that money from sales tax was vital to the state's coffers, while others said that the sales tax on food merely helps ensure that the poor, who usually do not pay much income or property tax, were contributing their fair share to the public weal.
This year, Huntsman made the food tax a target in his tax reform package, and it was one of the few elements to make it out of the Legislature, although in a watered-down form.
House Republicans initially proposed eliminating the tax on food entirely, as a means of tax reform and upholding a Republican principle that people should be able to hold onto as much of their own money as possible.
But the proposal ran into opposition from senators who argued that cutting off the money was foolhardy. They proposed a plan to provide a $75 income tax rebate to make up for the food tax.
The final compromise was to lower the state's share of the food tax by 2 percentage points, saving taxpayers $70 million starting in January.
From a political perspective, it is workable -- another example of how compromise makes our system work.
But it should only be viewed as a first step. The goal should be to eventually wean Utah off the sales tax on food as Gov. Huntsman wanted in the first place. Removing this tax is one element of an equitable tax system.
Reducing the tax helps, but it does not change the basic problem. Some pain remains. The working poor are still spending more of their incomes on food than others. They are still the ones being hit hardest by the tax on food.
Besides, taxing necessities is wrong. People should be taxed for their choices, not their survival. Not everyone has to buy a car, a computer or luxuries. And it's fair to tax such items. But not food.
Taxing food also puts us out of sync with most states. Only 14 states, including Utah, Idaho and Wyoming apply sales tax to food. Our other neighbors -- Colorado, New Mexico, Arizona and Nevada -- seem to function just fine without the tax.
To suggest that removing the tax would throw Utah's financial house into disorder has always been disingenuous. State income will remain whole since consumers can spend the money they save on food for discretionary items that are still subject to tax. And that's exactly what they'll do.
Huntsman might have considered rejecting the bill by veto and bringing it back for discussion at next month's special session of the Legislature dealing with taxes. But we think he was wise to sign it in a spirit of compromise. Experience will show doubters that it is safe to eliminate the remaining food tax, and that Utah will be better off in the long run if that happens.
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What do you thinkfi
Should the Legislature have eliminated the food sales tax completelyfi Send your comments to dhpolls@heraldextra.com or call 344-2942. Please leave your name, hometown and phone number with your comments. E-mail comments should not exceed 100 words; voice-mail comments should be no longer than 30 seconds. Anonymous and unverifiable responses will not be published.
The Daily Herald will publish comments on April 16.
This story appeared in The Daily Herald on page A6.
Posted in Editorial on Thursday, April 6, 2006 11:00 pm
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