Gov. Spencer J. Cox is a husband, father, farmer, recovering attorney, and Utah’s 18th governor. Since taking the oath of office on Jan. 4, 2021, Gov. Cox has secured funds for affordable housing, promoted suicide prevention and mental health resources and implemented water conservation and infrastructure planning. He also signed early education and workforce program funding, launched the new Utah Sustainable Health Collaborative, and expanded opportunity for women, diverse communities and those living in rural parts of the state.
"When everyone pays their fair share, everyone pays less tax." - Governor Gary R. Herbert
Governor Herbert believes that our current state tax system is out-of-date and out-of-balance.
This is especially true of our sales tax structure. In the 1980s, for example, sales taxes covered about 70 percent of the economy. Today sales tax covers just over 40 percent. Much of that comes from transitioning from a goods-based to a service-based economy. If the sales tax structure remains unchanged — even with improved government efficiency — state and local governments will not be able to pay for core services in the future. Policymakers will then have to choose between increasing tax rates or forgoing basic services. Both of these options could harm the economy.
That is why, in his 2020 Fiscal Year Budget Proposal, Governor Herbert asked our state legislature to modernize our tax system — especially with respect to sales and use taxes — during the coming 2019 General Legislative Session.
Consider some peculiarities of how we collect sales and use tax.
Did you know that limousine services aren’t taxed but auto repairs on the family car are taxed? Did you know that lobbyists and lawyers don’t have to tax their services, but computer repair persons do? In Utah, you don’t have to pay taxes on an elective liposuction procedure, but women pay taxes every time they buy feminine hygiene products.
Notice a pattern here?
Many of these tax exempt consumption services disproportionately favor those well-off enough to pay for limos, lobbyists or liposuction, while leaving the tax burden for essential services on Utahns who can’t afford those services.
In fact, a Utah family of three with $25,000 in income directly pays about 3 percent of its income in sales tax; a similar family with $150,000 of income directly pays only about 1 percent of its income in sales tax.
We can actually reduce the sales tax rate in Utah if more goods and services like limos, lobbyists and liposuction contributed to our sales tax base.
Governor Herbert is proposing a sales tax rate reduction that would return $225 million tax return in budget revenues to the taxpayers. Additionally, he is calling on the Utah Legislature to broaden our tax base and lower our sales tax rate. If all economic activity in the state is taxed equally, then the state sales tax rate in Utah could be reduced from 4.85 percent to as low as 1.75 percent. This would be a net tax cut for nearly 9/10 Utahns, beginning next year.
When everyone pays their fair share, everyone pays less tax.
Because the overall economy is shifting from goods to services, a shift in the tax base from goods to services will make the system more fair.
It would create a long-term path for fiscal stability that will allow state and local governments to provide essential services as our economy changes.
You can tune in here to listen to the governor discuss his plan for tax reform on The Salt Lake Tribune’s “Trib Talk.”