The Legislature is once again talking about the sales taxes Utah levies on groceries, except this time a Republican legislator offered the idea of eliminating it altogether. In a Wednesday committee meeting, Rep. Tim Quinn suggested raising the basic sales tax rate from 4.7 percent to 4.95 percent in order to eliminate the tax on food in a revenue-neutral way.
The sales tax on groceries is perpetually on the table because, 10 years ago, the Legislature reduced the state sales tax applied to unprepared food from 4.75 percent to 1.75 percent, and lawmakers have been missing that revenue ever since.
We opposed raising the sales tax on groceries when legislators proposed the idea back in February. For the obvious reasons. A tax on food is one of the most regressive taxes possible.
A low-income household that is struggling to live within its means can always skip the purchase of a new TV, hold on to an old car, wear hand-me-downs, shop at thrift stores and, yes, not jump at the latest iPhone release. That not only saves money, it avoids paying sales taxes.
But that family will not be able to stay out of the grocery store. And that same family will find that it spends a significant percentage of its income on food, and whatever tax rate is applied to it. Meanwhile, households with higher incomes can fill their pantries and still have money left over, money that they might save and so avoid paying so much of their income on sales taxes.
Eliminating the sales tax on food is a good idea. Or, the Legislature could offer a credit to low-income households to offset an increase in the tax, as suggested in the committee meeting on Wednesday. But, as Sen. Deidre Henderson noted, an increase in the sales tax rate on food will hit middle-income families, too.
If the Legislature wants to increase revenue, it could expand the tax base, by adding a tax on services. Or it could reduce the current number of available tax exemptions, which account for $650 million each year.
One thing is certain, if a food tax elimination is going to pass, it will be a Republican-sponsored bill. After all, Republicans are supposed to be the party against taxes. Quinn should move forward with his proposal, even if it isn’t revenue-neutral.
Interestingly, if anybody thought the Our Schools Now ballot initiative would spur the Legislature into raising taxes itself to more-adequately fund education, they would be wrong. Much of the discussion during most recent committee hearings revolve around revenue-neutral proposals.
What the Legislature is missing is that we need more revenue.