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Utah tax reform repealed on Capitol Hill

(Utah Capitol Building. Credit: Paul Nelson)

UTAH STATE CAPITOL – Lawmakers overwhelmingly approve a bill getting rid of the newly passed Utah tax reform.  It sailed through both chambers with little discussion, but, legislators still believe the state will have a huge funding problem in the future if big changes aren’t made.

Shortly after 11 a.m., the House voted 70-1 in favor of House Bill 185, which repeals the tax reform package passed in a special session last December.  Representative Keven Stratton was the lone “nay” vote.  At around noon, the Senate passed the measure 27-0, with only two senators being absent.

Critics of the tax reform package say raising sales taxes on groceries and gas would have caused serious harm to low-income families.  They also rebuke claims by lawmakers that the state will have trouble raising enough revenue for the general fund unless the sales tax rate goes up.

Senator Lyle Hillyard pushes back on that last claim, saying he doesn’t trust the lobbyists when it comes to tax revenue information.  He says he only trusts the Legislative Fiscal Analyst’s Office.

“Our fiscal analysts have convinced me, not just this year but last year and years before, that we have a real problem with our sales tax,” Hillyard says.

Even if the legislature hadn’t repealed the reform, it would have been put on hold.  State elections officials say the referendum against it gathered over 117 thousand verified signatures by early Tuesday morning, which was more than enough to get it placed on the November ballot.

Hillyard says along with the sales tax increase being repealed, so, too, are all of the benefits of the reform.  The increase in child dependent credits, the state earned income tax credit, the credit for social security users and the second largest tax cut in Utah history are all gone.

“This thing was put together in such a way that if part of it doesn’t succeed, the whole thing collapses,” Hillyard says.

Representative Francis Gibson sponsored the repeal bill, even though he fully supported the reform as it was being drafted.  He believes a lot of people got bad information about the process.

Gibson says, “There is a misconception that this was a rushed bill done in the middle of the night.  I will fiercely defend it, that it was not.”

He believes the state will have no choice to find another way to increase the revenue in the state’s general fund.  He says Utah doesn’t have a money problem… it has a distribution problem.

“We will be back.  It is inevitable.  We may even see something this session,” Gibson says.