A parade of critics from a cross section of Utah industries swarmed a House committee hearing on Friday to object to a Republican plan that would add new taxes for a raft of services.
The legislation, backed by Gov. Gary Herbert and being sponsored by Rep. Tim Quinn is called the “Tax Equalization and Reduction Act” and runs about 260 pages.
Republicans say the changes are necessary to shore up Utah’s sales tax base, which pays for government services including Medicaid, roads and public safety.
Quinn told the House Tax Revenue and Taxation Committee on Friday that revenue from sales tax has been shrinking over the years as the economy has shifted from goods to services.
“My kids today, if they want to listen to music, they subscribe to some service online. I paid a sales tax on that album and eight-track, my kids don’t pay a sales tax on that service,” Quinn said.
The bill would lower the income tax rate slightly, to 4.75 percent, and trim the sales tax rate to 3.1 percent — while broadening the tax base to include things like those streaming services and legal advice.
Critics from realtors to oil lobbyists, whose industries would see new taxes, packed the hearing.
Kelly Atkinson of the Utah Health Insurance Association warned a proposed 1 percent tax on premiums would be passed onto consumers.
“You can’t put lipstick on a pig. There’s just no way around it,” he said.
Others complained the bill was “draconian,” would kill jobs and was being rushed through the Legislature.
Democrats on the committee and some education lobbyists also raised concerns over trimming the income tax, which is earmarked for education.
“We need to keep that progress going for the future of our students, for the future of education, which will be the future economic driver for our economy,” said Jay Blain with the Utah Education Association.
Quinn said including the income tax cut was necessary to make the bill revenue-neutral overall, and he hit back at other critics as self-interested.
“How much profit does the oil companies make that came up and spoke against this bill?” asked Quinn. “How much profit do the advertisers make? How much profit do the TV and media stations and outlets make?”
The governor acknowledged during a Thursday press conference that getting the tax package passed will be an uphill battle, but said it’s his top priority.
“[It’s] a hard, complex issue,” said Herbert. “And yet there’s been a determination by the Legislature to say, ‘This is the time.’”
The committee voted 12-2 to move the legislation forward, though Quinn and other Republican supporters acknowledged it will likely undergo several more revisions.