Utah task force’s tax reform package raises sale, fuel taxes

November 8, 2019

Keith Goble

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A legislative task force in Utah has a plan to collect additional sales tax to cover expenses that include transportation work. A separate tax break also is planned as part of the tax reform package.

The Utah Legislature’s Tax Restructuring and Equalization Task Force has unveiled a tax reform bill. The 182-page proposal crafted by Republicans at the statehouse would raise the state’s sales tax on food, gas and certain other services. The excise tax on diesel would also be increased by about 33%.

Sales tax increase

On occasions the price for a gallon of gas reaches $2.50, the state’s 31-cent tax rate would be raised about 12 cents to 43 cents.

Diesel fuel purchases are not exempt from the tax reform effort to boost state tax revenue. Instead of being charged a sales tax on fuel purchases, commercial drivers would pay an extra 10 cents per gallon in excise tax – up from 31 cents.

Excluding diesel from the sales tax collection and instead charging more in excise tax is touted to aid truck operations asking for consistent pricing for advanced billing.

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

Services that include ride-sharing, towing, and shipping and handling or taxable sales also would be taxed.

The additional tax collected on food, fuel and services is estimated to raise about $570 million. Specific to gas purchases, tacking on the state’s 4.85% sales tax would be in addition to the current 31-cent fuel tax rate. The additional revenue is estimated to raise up to $275 million.

Income tax

In an effort to reduce the hit to many Utah residents’ pocketbooks, the state income tax rate would be reduced by nearly one-half percent from 4.95% to 4.58%.

Trimming income tax collections is estimated to save residents $650 million.

Advocates tout the $80 million in tax savings for residents when accounting for the income tax cuts and additional sales taxes.

Critics have concerns about the tax reform process to this point and about how the tax changes could affect education and the loss of revenue via the income tax cut.

Planning for the future

The fuel tax increases are billed as a short-term fix while legislators work on a long-term funding solution. Among the options being considered is a vehicle-miles-traveled tax.

The task force has a public meeting scheduled for Nov. 21. The meeting will be livestreamed on le.Utah.gov. Public input can be provided at the meeting or online.

The final proposal could be taken up for consideration before the end of the year during a special session. The other option would be to wait until the regular session convenes in January 2020.

Other state activity to benefit transportation

A Pennsylvania bill would accelerate the gradual shifting of money now earmarked for the state police to transportation. The target is money from the state’s motor license fund that is intended for road and bridge work.

Massachusetts Gov. Charlie Baker has a five-year, $18 billion transportation bond bill to invest in the state’ transportation system. Included is a first-of-its-kind plan to keep commuters off roadways during peak congestion.

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.