Tax restructuring proposals get pushback at public hearing

SALT LAKE CITY — Several small business owners have spoken out against a bill being drafted in the Utah legislature that would levy more sales taxes on food and gasoline, as well as most services like Uber rides or dance lessons.

At a hearing at the state capitol Tuesday night, many business owners told the Tax Restructuring and Equalization Task Force that the current bill being discussed will dramatically change how their businesses operate.

“It forces me to raise my rates,” said spa-owner Katrina Long, “[and] incur more costs in merchant fees. It adds more paperwork, accounting, and decreases profitability.”

Dr. Nathan Whiting, a veterinarian, said a tax increase would mean more homeless animals.

“Adding a tax will only increase the burden on pet owners, some to the point of abandoning their animals and increasing the population of Utah shelters,” Whiting said.

Jerry Nielson, who owns a dance studio, thinks a sales tax would put him at an unfair advantage.

“In the dance studio, we have to compete against schools that have dance programs and cheerleading and have certain tax exemptions that we don’t have in the private sector. This creates another division and gives them an unfair tax advantage,” Nielsen said.

Legislators want to address a general fund shortfall that The Governor’s Office of Management and Budget predicts will be $43 million this year. The shortfall is happening, in part, because more Utahns are shopping online.

Six plans were presented at Tuesday night’s meeting, but the Deseret News reports staff will most likely base any bill on a proposal by House Majority Leader Francis Gibson, R-Mapleton, and Sen. Lyle Hillyard, R-Logan, the two co-chairs of the tax task force.  It calls for an overall tax cut of $79 million while at the same time reducing the state’s 4.95% income tax rate. It would also restore the full sales tax on food and add sales tax to the purchase of gasoline.

Other small business owners questioned the need to overhaul the tax code quickly because the state started collecting online sales taxes this year, claiming they do not know the actual shortfall number.

However, Hillyard says there will be many chances for revision before a final bill is presented for a vote.

KSL Newsradio’s Dave Noriega and Debbie Dujanovic spoke with Utah Sen. Kathleen Riebe, D-Cottonwood Heights, about the tax reform proposals discussed at the Tuesday night meeting, and you can hear the segment below.

Contributing: Simone Seikaly