Utah tax reform, increased fuel costs rejected

March-April 2020

Keith Goble


In response to a citizen referendum effort opposing a tax reform deal, Utah state lawmakers have reversed course on the changes.

In December, the Utah Legislature met in special session to approve additional sales tax collection to cover expenses that include transportation work.

Gov. Gary Herbert signed into law a 199-page bill to raise the state’s sales tax on food, gas and certain other services. The excise tax on diesel would also be increased. Additionally, income tax cuts were included in the reform package – SB2001.

In reaction to the legislative action, a citizen effort was launched to nullify the new law.

Tax changes

SB2001 was highlighted by a provision to raise the state’s 31-cent gas tax rate by about 10 cents to 41 cents.

Diesel fuel purchases were not exempt from the effort to boost state tax revenue. Starting in April, commercial drivers were slated to pay an extra 6 cents per gallon in excise tax for a total of 37 cents – up from 31 cents.

Additionally, the state’s 4.85% sales tax was to be collected on food – up from 1.75%.

The additional tax collected on food, fuel and services was estimated to raise about $475 million.

In an effort to reduce the hit to many Utah residents’ pocketbooks, the state income tax rate was set to be reduced about one-third percent.

Trimming income tax collections was estimated to save residents $635 million.

Citizen referendum effort

Critics of the tax reform law voiced concerns about how the tax changes could affect education and the loss of revenue via the income tax cut. They cited shifting revenue away from income taxes and toward the state’s general fund.

The deadline to submit signatures for the referendum petition was Jan. 21. Advocates for the referendum effort were able to meet the signature requirement to get a repeal question on the November ballot.

Days later, Republican Gov. Herbert and legislative leaders in his party announced plans to pursue a repeal of SB2001. Less than one week after the referendum signatures were submitted, the Legislature overwhelmingly voted to repeal. LL


TA Folds of Honor
Keith Goble

Keith Goble has been covering trucking-related laws since 2000. His daily web reports, radio news and “OOIDA’s State Watch” in Land Line Magazine are the industry’s premier sources for information regarding state legislative affairs.