Utah business organizations applaud decision to delay tax bill, create task force

The Salt Lake Chamber, the Utah Technology Council and others have hailed the Legislature’s delay on acting on a tax reform bill that would have decreased the state sales and use tax rate but imposed a sales and use tax on services.

Meanwhile, during the general session’s final day last week, the Legislature approved a bill creating the Task Restructuring and Equalization Task Force. The group will study state and local revenue systems and make recommendations “to address structural imbalances among revenue sources.”{mprestriction ids="1,3"} The task force, with five House members and five senators, will get public feedback and present its study recommendations to legislative committees by August.

The task force creation occurred after HB441, the Tax Equalization and Reduction Act, passed in the House of Representatives, but the Senate announced it would not take action on the bill during the general session.

“After hearing from a number of our member businesses and listening to their concerns, we called upon the governor and the Legislature to allow for more time for deliberation on efforts to modernize Utah’s tax code,” said Derek Miller, president and CEO of the Salt Lake Chamber and Downtown Alliance.

“We recognize a policy change of this magnitude requires a robust public process and ample discussion. For this reason, we’ve been working around the clock advocating on behalf of our members in calling for more time to allow for the review and dialogue this complex issue requires.”

Days earlier, Miller issued a statement saying the current version of the bill was “neither perfect nor final.”

Miller said the Salt Lake Chamber still wants to see tax modernization. “We are confident a robust process of collaboration, coordination and dialogue will result in a policy that broadens the base, lowers the rates and modernizes our tax system to secure Utah’s long-term economic success,” he said.

After the delay was announced, the Utah Technology Council emailed a “thank you” to its members, saying that HB441 would have taxed “services heavily impacting our industry.”

The council earlier had said the state’s tech sector, much of which involves providing services, would face a new tax burden of 3.1 percent to 3.9 percent. That, it said, would force businesses to choose among several options: pass on the new taxes to consumers, absorb the taxes as a “new cost of doing business in Utah,” or leave the state.

It also contended that HB441 would hurt self-employed people in rural economies and “anyone who relies on the Internet economy,” including those involved in engineering, programming, coding and computer science “if not performed in-house.”

The Ogden-Weber Chamber of Commerce also had pushed for the Legislature to postpone HB441 “until further data can be collected and analyzed to better determine the impact of taxation on services.”

Many service-based businesses, it said, predict that taxing services “will threaten their viability, create a barrier to business development, and potentially lead to unintended consequences that could result in an economic slowdown and/or inflation,” the chamber said.

Among those testifying against HB441 before the House Revenue and Taxation Committee — which advanced the bill to the full House with a 12-2 vote — were representatives of Morris Murdock Travel, two television stations, the Utah Education Association, the Utah State Bar and the Utah Land Title Association, as well as another representative of the broadcast industry, an investment broker, a small-business owner and a private attorney. A representative of Zions Bank spoke in favor of the bill.{/mprestriction}