By Adam Denison
State government officials announced a tax proposal agreement on Friday, Feb. 24, 2006, that would give Utahns millions of dollars in tax cuts, including a much-anticipated food tax reduction.
The agreement was made following a long debate since before this year”s general legislative session started. The debate was over what the state”s $1 billion budget surplus should be used for.
“The Legislature knew there would be a surplus, so the debate as to how to spend the funds has been an ongoing one,” said Majority Whip Dan Eastman, R-Bountiful.
Debate over measures to completely eliminate the state food sales tax was the reason for the prolonged debate.
Eastman said the Senate opposed removing the sales tax because it would simply raise taxes elsewhere. Others, including Gov. Jon Huntsman, supported the removal of the food sales tax.
“All sides strongly felt that their positions were correct, and they stood firmly for those positions,” Eastman said.
The proposal would create a $70 million reduction in Utah”s food sales tax, which is approximately a 2 percent reduction from the current food sales tax of 4.75 percent.
Another $70 million would go towards reducing the current state income tax. This reduction will lower the income tax rate from its current 7 percent to 4.95 percent.
“It is time for Utahns to have a better tax system, one that is both competitive and compassionate and provides for the needs of our children”s education,” Huntsman said in a press release.
$20 million was also allocated for economic development incentives.
The proposal also included $8 million for water priorities, $90 million for roads and $78 million for committee priorities.
Elizabeth Lewis, a Provo resident, said the reductions in the food and sales tax were an excellent idea, but the legislature could made other reductions than just the income tax.
“I think a reduction in the gas tax could have been more helpful than a reduction in the income tax, especially for commuters,” she said.
Huntsman made the announcement in a press conference on Friday afternoon in front of the West Building of the capitol.