New details, including a hefty price tag, emerged Monday about Gov. Gary Herbert’s plan to give Utahns a $200 million sales tax cut and reduce the state rate while expanding the base by adding taxes to some services.
The plan the governor outlined in his $19 billion budget proposal last month and pitched Monday during the Utah Taxpayers Association’s annual conference is expected to be front and center when the 2019 Utah Legislature begins meeting Jan. 28.
At the conference, the cost of dropping the state sales rate from 4.7 percent to below 3.9 percent was estimated at $800 million — money that Herbert’s budget director, Phil Dean, told participants would come from broadening the tax base.
That could include taxing services such as limousine rides, cosmetic surgery and landscaping, as well as removing exemptions in the law for some purchases, including car washes, although no specific recommendation has been made.
The governor told the legislative, business and community leaders gathered at the Little America Hotel that the state’s shrinking sales tax base must be broadened so “everybody is, in fact, required to pay their fair share.”
The good news about what he’s calling his tax modernization plan, Herbert said, “is if we broaden the base, we have the ability to lower the rate and in so doing, everybody will pay less taxes.”
Legislative leaders said Monday they were willing to talk about the governor’s plan but stopped short of backing a tax cut or adding new taxes on services and removing existing exemptions.
Rep. Tim Quinn, R-Heber City, said during a discussion of taxing services the same as goods that he believes House Republicans are more interested in lowering the state income tax rate than cutting sales taxes.
While Quinn said lawmakers want to see the sales tax base expanded, “the devil is in the details.” Reducing the sales tax rate, however, would exacerbate the problem with the declining sales tax base, he said.