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Full house with more people in the hallway. Just opened an overflow. Meeting just started and @SenLyleHillyard is inviting people to email more comments and feedback. Will present bill, then take public comment. People need to sign up. Concern tonight policy issues. #utpol #uted
First, @SenLyleHillyard reminding us of the issues we are here to address. Structural imbalance of sales and income tax with growing needs in transportation and general funds. Minutes approved.
Now Rep. Gibson discussing source of bill. Public comment to task force, including the last October meeting (which reportedly lasted until 11 pm). Will meet again in two weeks to discuss again and then discuss education piece. Not here to discuss education piece tonight.
Goal to find proposal that Legislature and @GovHerbert will approve. Nothing to be finalized tonight - just part of the process. Taking other comments and suggestions. Sen. Bramble raising concern about process - only learned about bill contents through media today. 182 pages.
Sen Hillyard responding that this is a difficult job, and took time. Process problem, trying to get this done before the end of the year. Time to discuss and review before next meeting. Sen Bramble says transparency important. Shouldn't read about leaked details in media.
Had to tell constituents this morning he had no idea what was in the bill when they called and asked this morning. Even though he is on the committee. Received 9:57 am email notification-3 minutes before it was released to the public. That's a concern. Less than 6 hours to read.
Committee should have notice before media. Sen Hillyard again stating there will be time to read and discuss. Sen Bramble not satisfied. Need time to so we can responsibly respond. Sen Hillyard not sure where the press got info. Noted article had errors.
Now to staff for presentation. Plan results in net tax cut of $80 million for next year. Holds public ed harmless by shifting higher ed back to general fund.
Sen Bramble wants to know of task force members can ask questions during presentation or if they ha e to wait to the end? Asking about itemized deductions used in determining impact. Last time used scatter plot to see impact on every tax payer in the state. Wants to see the same.
Referencing this chart. Staff responds this summarizes the same data. Can provide scatter plot later.
Grocery tax to be mitigated by tax credit. Stopped again with another question about motor fuels. Staff responding they modelled food consumption using consumer survey expenditure data. Same thing for fuel consumption. No sales tax filer database, but attempted to model it.
Rep Briscoe asking about income tax brackets. Will you highlight what changed from a couple weeks agao? Sen Bramble asking if this captures increase of online sales tax. Staff: it doesn't. Sen Bramble: that decision just became effective on 1 October. Clarifying for the record.
Sen Hillyard - my understanding that some of those remote sellers voluntarily agreed to pay sales taxes. Staff - those are included, as are estimates for Wayfair. Not new marketplace sellers such as eBay or Etsy or many Amazon sales. Sen Bramble not satisfied.
Staff not surprised. No one ever agrees, but data so far supports estimates. One comment in support from task force. Moving on.
Reductions, Expansions, and Budget shifts. Claims to establish 'meaningful funding security for education' with no such mechanism. [Cuts income tax much more than previously discussed. Every .05% cut = $55 million taken out of education fund current rate 4.95%. Proposed 4.58%.]
Sen Bramble offers critique. Rep Gibso. Making a note. Suggests it would have been nice to have those notes. Sen Bramble shoots back "It would have been nice to have a bill." Audience: ooh. Sen Mayne asking how low income folks will know to file form if not filing income taxes.
Sen Hillyard says those using WIC and SNAP won't qualify and others will need to figure it out. Hopeful there would be enough publicity. Sen Mayne concerned for seniors who may not take advantage of program due to pride, don't know, and otherwise fall through the cracks.
Dr. Cornia requests staff explain intergenerational poverty regarding section creating Earned Income Tax Credit. See line 347 of the draft bill.
Sen Fillmore now. Spent day at ER with child. She is fine. Issue; trying to help those least able to afford these costs. Two ways. Tax cut to top 90% so no one at the bottom has to fill out form. Or could target benefit with annual form. This plan. Fillmore likes it this plan.
Rep Briscoe asking about feminine hygiene products in the draft. What about diapers and other hygiene products for adults. Does it only apply to feminine hygiene products? Answer: yes.
Next, provisions expanding sales tax base. Full rate on food. Repeals a number of sales tax exemptions: electricity to ski resorts, textbooks purchased outside college book stores, car washes, newspapers and newspaper subscriptions, etc.
Rep Briscoe asking about specific revenue from each exemption removal. Another question: how do sellers recoup fraction of costs for coin operated laundries and car washes. Response: burden on seller. Follow up - why on earth these services? Implies the burden falls on the poor.
These coin operated services take quarters. So cost either comes out of seller bottom line or results in cost increase broen by consumer.
Back to staff. Removing existing sales tax exemption on motor and some special fees. I.posed at distributor level on wholesale price. Diesel separate. New excise tax to support trucking companies. ?
Funds to go to transportation as bridge fee. UDOT to study transition to new user fee.
Next, tax on services including maintenance and repair of real property. Anything that is not capital improvement. Everything else subject to sales tax. Sen Mayne: Including sewer line repair? Trenching? Yes. Sen Bramble: what defines difference between repair & improvement?
Sen Hillyard deferring to staff attorney. Attorney deferring to Tax Commission. Sen Bramble concerned that this is a decision for legislators, not the tax commission. Sen Hillyard making a note.
Back to staff: Installation of tangible personal property and shipping to be included if part of a sale. Veterinary services if non-emergent. Including spaying and neutering. Sen Fillmore asking what percentage of veterinary care is emergency. Staff: one data point said 40%.
New taxes on peer to peer ride sharing, such as Uber, limousine services etc. Another question about taxation of installation of tangible personal property. Generator example - is that a capital improvement? Need to be careful not to dump this on tax commission.
Suggestion to exclude tax on installation if installing anything that is exempt from sales tax. Staff continuing: towing, parking lots & garages, personal services incl. tanning, esthetically, astrology, fortune telling, etc. Streaming media. Property storage incl. deposit boxes.
Sen Bramble asking about online sales of rooms - currently remitting sales tax on wholesale, not retail price. Rep Gibson acknowledging that is an oversight and will be added. Staff continuing: taxes apply in state. Businesses to collect and remit tax.
Kristen Cox from Governors office pleased most concerns addressed. Has a few more but won't raise now. An Hillyard requests an email. Staff now: business vendor discount for sellers collecting sales tax. 100% of first $2,500 of sales. Then retain 1.2% of sales tax up to $400k.
Sen Bramble asking for data. Fine for small vendors. What does it mean for those collecting hundreds of millions? Noting credit card interchange fees. Discussion needs to happen. Rep Gibson will look at it. Sen Hillyard states many businesses prefer cards - guaranteed payment.
Increasing state motor vehicle rental tax from 2.5 to 4%. Sen Bramble asking if there is consideration for in state rentals? Personal rentals? Companies like Drift where you rent using an app? Staff attorney not sure. Sen Hillyard thinks it should be included.
Another comment: peer to peer a different animal. Rental companies get sales tax free purchase. Touro cars are about 25% personal use, but if mixed use that does raise some questions.
Someone missed the explanation about the diesel fuel exemption. Going back a page. Sen Hillyard explaining that is easier predictability for trucking business, per their request. Sen Hillyard wasn't in meetings where this was discussed. Aviation fuel bought in bulk by carriers.
Concern being raised that this seems like a tax discount for diesel users. Sen Hillyard cannot explain. Sure that someone will contact questioner to explain. Apologizes that he can't.
Staff responding. Diesel tax an excise tax, not sales tax. More stable. Concern that sales tax on gas is higher than excise. Staff explains concern: thought it would be tax on retail, not wholesale price. Pretty close. Could raise excise 1 cent for parity. Interstate allocation?
Rep Briscoe back to page one. Why are we dedicating a significant portion of new food sales tax money to transportation? Why aren't we talking about that?
Rep Gibson - this replaces TTIP requirement but retains investment in transportation investment fund. Sen Hillyard pointing out this funding bridge until we can get a user fee set up. Sen Bramble asking for a repeal date. Sen Hillyard says we are working with UDOT on that.
Staff pointing out UDOT working to increase participation in user fee pilot, increasing number of pax for HOV lane to 3, etc. Moving school lunch program to education fund and shifting liquor sales to general fund.
Also noting that there is a plan to remove constitutional earmark dedicating income tax to education. Not discussing that tonight. No plan yet. Rep Briacoe asking about process. Told there is another group working on that. When will take force see that? Sen Hillyard doesn't know.
Sen Hillyard promises there will be time to discuss and it won't be rushed. Rep Briscoe pointing out requirement for additional meetings to properly vet & get public comment before action. Not okay to suspend rules like end of legislature. Sen Hillyard assures there will be time.
Exemptions data sources - surveys, censuses, estimates, etc.
Notes fiscal impact chart does not account for business response and potential consumer response. Items also modelled individually. Noting there will be changes when modelled together/interacting. Fiscal note usually done after bill drafted. This done simultaneously. Will change.
Now open to questions. Request to explain assumptions and algorithms. Staff: impact of food sales tax is not linear. Happy to share that. Sen Fillmore asking about fractional dedications to help local government in the past. Considered? Potential windfall on local sales tax.
Sen Hillyard pointing out sales tax was never removed on food and varies by region because of local options. Staff: this does not restore base for local option. ?
One more highlight - a number of income tax exemptions currently backfilled from general funds, but those are removed in this bill. Less than $5 million.
Seeing no further questions, now opening to public comment. Limiting to 3 minutes. [This is going to take a minute.]
Heidi @myuea @UEAheidi up first. Sharing joint statement from Utah Public Education Coalition. Want stable funding, including inflation, USBA and Governor 10 year plan. Quoting man in the arena. Bill not fair and not just for kids. No vision for schools we want.
How can we decide on this plan with no plan to fund education? Failed to make a case that justifies a special session. Those of us in the arena doing the work, need to do what we require of math students: show your work. Takes investment, not cuts to see what we need in schools.
Applause and cheers. Sen Hillyard threatens to cut off speaker if there is a 'protest.'
Now a businessman complaining about services being excluded and potential for tax pyramiding in landscaping. Most revenue for these services are from businesses. Why not tax all but medical services?
Speaker for food industry next. Concern that 80- 90% sales are by plastic and require swipe fee, including on sales tax. Capping vendor discount will result in significant revenue loss. Doesn't account for cost of internal auditing. Please reconsider cap.
Utaj trucking association rep addressing excise tax and IFTA questions. Truckers have to report every mile driven in every state. Excise tax or field tax based on per gallon with flat rate is easier and more consistent for tracking with IFTA. 10c rate. Diesel rate higher.
Requesting increase of only 6c instead of 10c. Willing to support gas tax at reasonable rate. Happy to be part of the solution. Not prepared to answer question about fuel tax in other states. Staff: several other states do charge excise and sales tax.
Next, rep from a midsize plumbing company. Concern for plumbers & HVAC & whether they will have to determine if repairs are repairs or capital improvements. Concerned for homeowners and repair personnel who aren't sure what city they are in and compliance. Also business discount.
Beth Holbrooke from UTA with concerns. UTA funded by mix of funding. Change to revenue stream can impact services, expansion, etc. Want to be strong partner and need to support and sustain maintenance. Growth concerns. Taxi and limo services - does that include vanpools?
UTA partnering with private raid hailing service on micro transit project in two weeks. Is this included in peer to peer ride sharing or governmental transport? Answer: political subdivisions now brought into alignment with other local governments.
Speaker representing Enterprise rental cars. Complained that already taxed highly. This will raise tax to almost 20%. Highest tax payer in Utah. Half of renters are Utah residents. 12,000 transactions a month are Utahns. Out of state travellers pay an even higher rate at airport.
Already seeing shift at airport to Uber. Thought this bill was to broaden the base. Doesn't see how this bill does that. Sen Bramble asking follow up question - if increase applied, but exempted rentals in local neighborhood. What % is local? Answer: about 50-50. Would lose 1/4.
Then creates incentive to shift to Uber. Sen Bramble suggesting if the same tax as on rentals was applied to Ubar at airport, that would reduce incentive to shift? Yes. Sen Bramble not proposing that, just offering idea for clarification.
Property manager speaking next. Commercial properties are not end users. Results in tax pyramiding, passing costs on to end user. Citing report. Concern for a number of categories listed in plan that apply to household & commercial properties. Landscaping, painting, etc.
Next speaker representing building owners, vendors, developers, etc. Concern about ongoing repair and maintenance of buildings. Creates business to business tax. Pyramiding. Concern that we not tax business to business services. Results in increased rents, prices, etc.
Tax is 15c to 35c tax per square foot depending on commercial property. It's a lot of money.
Next a veterinarian speaking about his small business. Percentage of preventative medicine in veterinary medicine not well understood. Taxes levied will cause extensive work to determine what qualifies for tax. Person who diagnoses tumor or cuts it out? Get better understanding.
Why is this business taxed when there are far more doctors, lawyers and attorneys? You misunderstand human-animal bond. Reading a poem highlighting how a perfect person is almost as good as a dog. Pointing out most folks would prefer to see lawyers taxed.
Utahns Against Hunger reiterating opposition to increase in food sales tax. Citing studies that this increases food insecurity. Utah already has significant food insecurity. This will undo much work that has already done. Oppose grocery tax credit. States tried then eliminated.
Credits and exemptions not effective. Not enough. Too easy to eliminate. Too low participation rate. Additional burden on food pantries. Study policies to remove barriers to healthy food. Moral obligation to ensure tax Restructuring benefits all Utahns. Needs to be in good faith.
Many SNAP and WIC beneficiaries to spend additional person income on groceries.
Another rental car company representative. Used to only pay sales tax. Taxes added for Legacy highway, etc. Never removed. LOS Angeles charges 9.5% tax compared to our 17.5% tax.Most renters are locals. Huge disadvantage. Playing favorites w/ Uber, Touro, etc. Leave rentals alone
Tax Payer Association now. Plenty of renevue for a tax cut. Concerned tax projections don't show enough revenue growth. This proposal a good start. Withholding deduction will result in significant increase in paychecks, especially with refundable tax credit.
Approximately 40% of education funding is from property taxes. Truth in taxation saved revenue when income taxes dropped in recession because property taxes floated up to maintain stable revenue.
Husband and father speaking next. Get it done every day. Complaining that taxes increased $4k over last year. Lost exemption on children. Two sales tax increases and property taxes, plus taxes on online sales. Believes goal is to change tax code before online tax sales show up.
Sees data online where all tax revenues are rising. Taxed on every cotton picking thing. Unhappy at thought that his money might be given to those who didn't earn it. Saw a $1.2 billion tax surplus last year. That's $1,600 per household. How much better? $ in classroom? None.
Rep Quinn responding. Those changes were a result of the Federal tax structure change. Ran a bill to address that the next year and gave back $30 million. This bill will cut taxes. Not true to say legislature has raised taxes. Increased revenue due to booming economy.
Asks for specific examples? Yes. Gas tax. Also freeze of property tax. Actually a tax increase. Recognizes work on restoring child tax credit, but asks where phase out happens? Same as it was. Will be restored. Speaker appreciated efforts.
Member of planning commission speaking as a start up business owner working to improve air quality. Concern about peer to peer rose share taxation. Electric low speed vehicles saved 2,500 miles. Puts a heavy burden on small business. UTA gets an unfair advantage with exemption.
Consider gross sales revenue exemption for small businesses. Sen Bramble has a question. How is your challenge different than any other business without regard to tax reform? Speaking to sales tax on service...not just sales tax.
Back and forth. Why taxing business that are trying to help reduce air pollution when also trying to reduce pollution? Sen Bramble making argument that social benefit is not a special case. Burden or taxing applies to all start up businesses. Sen Fillmore defending constituent.
Tax burden was x when business started. Modelled and cost structure modelled on that. Now being told tax burden will be x plus y. Sen Hillyard asks for follow up email.
Another veterinarian speaking. Preventative services should not be taxed. Grooming and boarding should be separated and considered as potential options. Veterinarians willing to help tax reform committee understand concerns.
Funeral director speaking for association next. Funeral homes already regulated by federal government regarding fees. Concern about taxation on livery services. Want exemption like emergency services vehicles. Those taxes can be burdensome. Also transport from place of death.
Interhospital transport of infants for autopsy... Current benefits for organ donation transport. Change could impact partnership with donorconnect. Consider impact on organ donation.
Utah petroleum markets association next. Concern about Utah gas tax. Flat rate and rolling index. Elimination of exemption on wholesale price will result in a 9c increase in price per gallon. 6 states impose excise tax in addn to sales tax. More than 6c above ID & 20c above AZ.
Rural drivers have to drive more miles. Wreaks havoc on border convenience stores. Support transport funding. Prefer straight up c per gallon fee (flat tax) rather than double taxation.
Next @Utah_teacher speaking from @GEA_Utah. Noting no line number for stable funding mechanism for education. Expect another bill, but they are out of order. Should be funding mechanism for education BEFORE cut to income tax. Right now, every cut to income tax is a cut to #uted.
Speaking of school rebuild. Rebuild school first before tearing down old building while children are still in it. This flexibility is clearly intended to spend less on education. Frequent comment this summer: protect education funding. Do the first thing first.
Now @carenjburns speaking about classroom
37 students in room designed for 25. I created suicide attempts. Kids in crisis. Parents struggling. Speaking for families. Kids need safe schools. Teachers amazing. Doing job 110%. Concerned abt what happens when less than $10/student.
70% of students below poverty line. Free lunch. Food pantry put of classroom closet. Don't know how to afford to lay for home repair. Can't take time off to take kids to doctors. Proposed tax increases will hurt the 700,000 kids in the state and their families. Consider the kids.
Don't know difference between capital and repair. Not in construction. Not q small business owner. Appreciate the work you do, but please don't raise tax on food and services. Please don't remove #uted constitutional earmark. Hurts kids and families.
Another speaker suggesting this proposal could be fixed is to check numbers and consider tax on out of state v in state and end up with tax cut for Utah but could be revenue neutral pr increasing.
Now @SutherlandInst speaking in support. Grocery ta a fair way of taxing food and supports better way of life by increasing funding for schools. [What? How?]
Now a health care professional speaking against tax on estheticians because they work in medical field. They help people with skin diseases and irritations. Permanent make up often used by cancer patients.
Next speaker expressing appreciation for changes so for. Now asking for an effort to broaden base further by parsing out private and commercial business. Does marketplace tax capture Groupon? KSL deals? Never pay tax because a service. Also sell hard goods but never taxed.
Vendor has to pay sales tax, but coupon business like Groupon does not. Not fair. Glad to see lessons are now exempted. Staff thinks Groupon should be taxed, but will clarify for next meeting.
Next speaker a senior, speaking for seniors. Seniors are on fixed incomes. A lot of folks can't afford personal services. Food tax a burden. Husband had garden & loved yardwork, but had to give up this year. Tax burden on top of property tax, etc. Almost at breaking point.
Committee asking if familiar with tax credit for seniors? She is, but not sure how it will play out. Anxious. Thanked for time.
No more public comments. Question to committee - discuss? Motions? Not to approve tonight. More meetings if needed. Thanking and complimenting staff for hard work.
Sen Fillmore makes motion to adjourn. Sen Bramble reiterating need to ensure committee members must have ample time to review before meeting. Sen Fillmore asking to clarify motion. Last meeting chairs wanted consensus. Voted to draft bill. Bill is not what was agreed to.
Not what task force agreed to. Has a list of motions, but concerned that the same thing will happen. Feel motions would be based on sentiment, not language. Sen Hillyard replying whatever bills we pass we have to live under. No special treatment.
Sen Hillyard will accept motions and suggestions from task force members outside of this meeting. Rep Gibson asking for a conversation with context. Replying to Sen Fillmore this is a working draft. We will look at notes from tonight. We need to figure out what we need to look at
Motion to adjourn passes. 5% battery left. Thread complete.
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