SALT LAKE CITY – At a time when most communities in Utah are worrying about impact of lost sales tax revenues due to the coronavirus, GOP gubernatorial candidate Thomas Wright is advocating for a suspension of state and local sales taxes on food.
“I think we heard the citizens of this state loud and clear that they are uncomfortable with the sales tax on food,” the former GOP chairman said May 7, referring to the statewide petition drive that forced Utah lawmakers to repeal a tax reform package that reduced income taxes while raising sales taxes on food, gas and some services.
As originally proposed, that tax reform measure would have taxed food at 4.85 percent. After lawmakers repudiated their own plan during the opening hours of the 2020 Legislative session, the sales tax rate on food products is now 1.75 percent.
“The tax rate on food should be zero,” Wright said flatly, adding that reduction should be a part of the state’s recovery plan from the coronavirus pandemic.
Wright’s proposal obviously took the other candidates vying for the Republican gubernatorial nomination by surprise at a face-to-face forum sponsored by the Salt Lake Chamber of Commerce and the Economic Development Corporation of Utah.
All three of them — Lt. Gov. Spencer Cox, former Gov. Jon Huntsman Jr. and former Utah House speaker Greg Hughes — agreed that the repeal of the food sales tax might be a beneficial long-term goal, but dismissed Wright’s proposal as ill-timed during the economic uncertainty spawned by the ongoing pandemic.
“That wouldn’t be my first order of business as governor,” Huntsman said mildly in reaction to Wright’s proposal. “A goal? Absolutely … But, during the short term, I think we’re going to have to prioritize very carefully those areas that really do deserve consistent funding.”
Government entities across the state are bracing for the kind of belt-tightening that Huntsman predicted.
In Logan, Mayor Holly Daines said that while the city council is required by law to pass a budget for the 2020-21 Fiscal Year prior to July 1, the adverse economic impact of the coronavirus shutdown won’t be fully understood until reduced sales tax revenues begin to flow back from the state in September.
City officials expect those tax revenues to be significantly reduced by the cancellation of high-profile events like the Utah State University commencement, the Summerfest Arts Faire and the 2020 theater seasons for the Lyric Repertory Company and the Utah Festival Opera & Musical Theatre. Just the cancellation of the USU Summer Citizens Program is expected to reduce local economic activity by $4 million.
While the full impact of those losses is being assessed, city employees will forego a planned 3 percent pay hike and department heads will defer all but unavoidable expenditures.
But Wright argued that the state should be planning similar steps to reduce its budget.
“We have to do what businesses and families are doing in the state,” he said. “We need to figure out ways to live within our means in the state of Utah and our means are going to be a lot less than they have been in years past.”
State analysts are suggesting that “a lot less” could be a $140 million shortfall in tax revenues.