Utah Gov. Gary Herbert announced Thursday that the state Legislature will repeal sweeping tax reform measures that passed during a special legislative session in December.
In a joint statement with House Speaker Brad Wilson, R-Kaysville, and Senate President Stuart Adams, R-Layton, the governor said legislative leaders will introduce a bill to repeal Senate Bill 2001 when the 2020 general legislative session opens on Monday.
The decision to fully repeal SB 2001 comes just two days after opponents of the tax reform turned in tens of thousands of signatures they gathered for a referendum that would let Utahns vote on the reform in November. At least 115,869 signatures would be needed for the issue to be put on a ballot. As of Thursday at 8 a.m., county clerks had verified 81,314 signatures throughout the state, according to the Utah Lt. Governor’s Office.
The tax reform would have reduced taxes by approximately $160 million by cutting income taxes and raising sales taxes, including raising the tax on unprepared food from 1.75% to 4.85%, an aspect of the bill that was widely criticized.
The joint statement addressed the referendum directly.
“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,” the statement said. “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 civil process and made their voices heard.”
By repealing the tax reform, the Legislature will be able to draft the state’s 2021 budget “without the uncertainty of a referendum potentially changing the tax code midway through the budget year,” the statement said.
The Legislature will begin looking for new ways to modify the tax code once the repeal passes, according to the statement.
“The original challenge we worked to address lies before us still,” the statement said. “Crafting the right policy is critical to our state’s long-term success.”
Herbert addressed the repeal during his monthly news conference on Thursday.
“As we’ve gone through this process, the people have, in fact, not agreed with the tax reform proposal,” said Herbert. “And rather than have a cloud hanging over the legislative session … we decided the best course of action, reflecting the will of the people, is in fact to go back and push the restart button.”
Herbert praised the Legislature for taking on the “very difficult tax” of reforming Utah’s tax code. “Sometimes doing the right thing is not necessarily the popular thing,” he said.
The grocery sales tax “was really probably the catalyst that drove this issue,” the governor said, adding that he “never thought that was good policy.”
Without questions about the referendum looming over their heads, legislators can work this session to come up with tax reform that has more public support, Herbert said.
“We’re all Utahns,” he said. “We want good policy on everything, including tax policy.”