Local option sales tax considered in Utah

by Skip Oliva June 17, 2015

Utah voters likely to consider local option sales tax on gasoline to fund road work

Voters in dozens of Utah cities and counties may soon decide whether to add another quarter percent to their local sales tax. In March, Utah Gov. Gary Herbert signed into law House Bill 362, a broad package of measures designed to fund transportation projects throughout the state. The bill converts Utah's statewide gasoline tax from a per-gallon levy to a 12% sales tax. This will raise the price of gasoline by 5 cents per gallon when it goes into effect on January 1, 2016. The new law further indexes future increases to inflation, meaning the total sales tax could eventually rise by as much as 15 cents per gallon.Local Option Sales Tax HB 362 also authorizes each of Utah's counties to impose an additional sales and use tax of 0.25%. In counties that provide public transit services, 10 cents out of the 25-cent increase would go to the transit authority, 10 cents to the municipalities (cities, towns, et al.) within the county, and the remaining 10 cents to the county itself. If the county does not provide public transit service, the county would keep 15 cents and give the remaining 10 cents to the municipalities. Individual localities must pass a resolution to implement the local option sales tax. Local voters must then approve the tax increase. According to the Salt Lake Tribune, “at least 55 Utah cities and towns have passed or are considering” such measures for this November's ballot. Essential Guide to Sales and Use Tax for Small Business Download "The Essential Guide to Sales and Use Tax for Small Business" FREE today and quickly get a handle on what the states are expecting from a business today.[/caption] Opponents of the local option sales tax argue any public vote should be postponed until November 2016 to coincide with the next presidential election. The Utah Taxpayers Association noted in a recent press release Salt Lake County officials are “feeling pressure” to ignore a local ordinance requiring any sales tax referendum take place next year in order to placate the demands of pro-tax groups to hold a vote this year. The potential difference in turnout is not insignificant. According to the Utah Lieutenant Governor's office, which oversees statewide elections, about 80% of registered voters participated in the 2012 presidential election. That figure dropped to just over 46% in last year's midterm elections. That figure will likely be even lower this November, when only local offices are on the ballot. But proponents argue it is important to pass sales tax increases now to fund important transportation projects. One local official told the Tribune her city needed at least $50 million to fund a “wish list” of road projects, which even the upcoming gasoline tax increase would not cover. The Utah Transportation Coalition, a group composed of the state's major employers, has also pushed for quick votes, arguing localities only have “one-third to one-half the funds they need for transportation infrastructure.” Conversely, the Utah Taxpayers Association said voters should reject any effort to increase the local sales tax. The association said rather than “hide the cost of Utah's roads in a sales tax,” officials should follow Oregon's lead in considering funding transportation projects through a per-mile levy against motorists who actually use the roads. S.M. Oliva is a writer living in Charlottesville, Virginia. He edits the international legal blog PrivyCouncil.info
Skip Oliva
Skip Oliva

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