Sales & Use Tax Blog

Potential overhaul of Utah sales tax system to fix broken policies

Utah sales tax is a contested topic between members of the local community and Utah state officials who are at odds over what to do about current Utah sales tax policies. During recent town hall meetings across the state, many of the attendees publicly voiced their concerns about how data was being misused and the way information was being spread to rally support around overhauling the state’s tax system. The tax reform task force is marketing the overhaul as an immediate need to avoid a financial crisis.  The tax reform task force grew from the Utah Legislature’s failed attempt this past spring in House Bill 441 to apply Utah sales tax to a wide array of historically untaxed services.

There is a difference in opinion about how bad the issue really is with some members of the community stating that there has been an increase in Utah sales tax revenue over the years and an overhaul may not be justified. The tax reform task force, appointed by the state legislature, believes that the flow of sales tax revenue has slowed due to changes in consumer spending that are more geared towards untaxed services as opposed to taxed goods. This funding imbalance in the state’s budget has created a burden on other tax resources as they look to earmarks and laws to find creative ways to fund needed services for the state.

House Bill 441, which was proposed, but not signed in to law in March 2019, could have solved the revenue imbalance by increasing the Utah sales tax for previously untaxed services but was quickly dismantled as those impacted by the increase decried the bill. As a result, the task force was formed and they have been on a statewide tour getting feedback from the town hall meetings to inform policy proposals that would be considered by the full legislature. While some would say that the budget is not in jeopardy and this does not warrant an emergency response, others believe the outdated sales tax code is not structured to keep up with demand. Regardless of the differing opinions, the risks must be weighed on whether to act or not.

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