Gov. Gary Herbert and top Republican leaders announced Thursday they will not pursue tax reform this session, an about-face coming just hours after the bill’s chief sponsor expressed confidence about its chances.
"For a number of reasons this session, we're not going to be moving forward with pursuing the passage of H.B. 441," House Speaker Brad Wilson said at a hastily-called press conference.
The bill was considered a top priority for the governor and legislative leaders, as they warned of Utah’s shrinking sales tax base, which funds government services, and the need to plan for an economic downturn.
The proposal coupled a sales tax cut of around 3 percent and income tax cut of 4.75 percent alongside a broad expansion of new taxes across several industries. The bill would have added duties for things such as haircuts, lawn care and even health insurance, among many other services.
Herbert, citing the Legislature’s short 45-day session, said they were up against “the tyranny of the clock,” as the primary reason for punting tax reform this session. The governor said he expected work to continue in the interim and will likely call a special session this summer.
“There’s more time that’s needed to get us all comfortable with the policies that are being presented,” he said.
But public pressure also played a role in the abrupt reversal, with local businesses worried about the rushed process and the bill’s unintended consequences.
The Salt Lake Chamber, which had initially supported the measure, reversed its position after pushback from its members who wanted more time to sift through the proposals.
“We recognize that a policy change of this magnitude requires a robust public process,” said the Chamber’s Abby Osborne.
The governor pushed back on a question of whether they had relented to mounting criticism over the bill’s quick pace.
“I don’t think we caved to anything,” Herbert said. “I think we responded to what the public understands and wants to do. Caving is such a pejorative word.”
Rep. Tim Quinn, R-Heber City, the bill’s sponsor who had earlier in the day sounded confident about his legislation’s chances in the House, thanked the public and business leaders for their engagement.
“That’s what this process is about: [it’s] refining a piece of legislation to make it, at the end of the day, the best piece of legislation that we can pass,” he said.
Republican leaders did not rule out the possibility of a standalone tax cut later in the year, after pledging a record $200 million to 225 million cut at the outset of the session. Yet they were noncommittal about how much taxpayers would get.
Wilson said they would likely pair a tax cut with a reform package.
“I think to do this wisely, we probably need to couple them at the same time,” he said.