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As State Revenues Grow, Gov. Herbert Proposes $160M Tax Cut

Photo of the Utah state capitol building.
Austen Diamond
/
KUER
Utah lawmakers on Friday released a new draft of a sweeping state tax reform bill, which bumps the proposed tax cut to $160 million.

Lawmakers will have an extra $682 million to spend next year, and legislative leaders say that’s a good reason to double a tax cut they’ve proposed as part of a sweeping tax reform bill.

The announcement Friday evening accompanied a new version of the bill, which bumps the proposed tax cut to $160 million. The latest draft would trim the income tax from 4.95% to 4.66% while imposing new sales taxes on food, services and gasoline. 

Lawmakers have also proposed raising the annual dependent exemption from $565 to $2,500, and the newest version allows joint filers without children to claim one exemption.

Gov. Gary Herbert requested the increased tax cut after seeing that the state would collect an additional $482 million in ongoing revenues and $200 million in one-time money.

“This year’s revenue estimates show that our economy continues to thrive,” Herbert said. “This success is due to hard-working Utahns. Therefore, I am asking President Adams, Speaker Wilson, and the Utah Legislature to double the planned tax cut from the proposed $80 million to $160 million as part of the tax modernization effort.”

While Republican leaders say the numbers highlight a strong, vibrant economy, they also illustrate a “structural” problem with the state budget: New income tax revenue was more than 10 times higher than that of the sales tax, which has slowed in recent years as Utah shifts to a more service-based economy.

“We are committed to ensuring our best days are ahead of us,” said House Speaker Brad Wilson. “Utah families deserve a dividend on the extraordinary success our state has enjoyed over the past several years, which will come in the form of a significant tax cut.”

Lawmakers have spent the better part of 2019 looking at ways to reform the state tax code in order to strengthen the sales tax, which pays for roads and all state government services outside of education. 

Legislative leaders have been lobbying for a special session on Dec. 12 in order to implement the tax cut by 2020.

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