If a recent proposal becomes law, expect markup where you haven’t seen it before
A plan from the Utah State Legislature’s Tax Restructuring and Equalization Task Force would broaden the state’s tax base, reducing it in some places and increasing it elsewhere. The changes will have complex effects; while Utahns’ income taxes will decrease, sales taxes around the state will increase and appear where they haven’t been before, such as at the vet, the car wash, in taxis and elsewhere.
The biggest, single change involving the sales tax, however, will be at the gas station. The state’s gas tax in 2020 will in crease to $0.311 per gallon, and the task force’s proposal contemplates an additional 4.85% sales tax at the pump. That sales tax, according to the proposal, would soon be replaced by a “user fee” of Utah’s transportation infrastructure, which is yet to be developed.
Besides the proposed sales tax on fuel and an increase to the tax rate on vehicle rentals—up to 4% from the current 2.5%—there is a laundry list of services that the state would newly tax under the plan and a list of services whose tax exemptions would be removed under the new tax plan. Here is a list of some of those services most relevant to Moabites that would newly be taxed at the 4.85% tax rate for sales and use:
Tour operators and sightseeing transportation. Scenic transportation and tour providers do not currently include tax on the sale of tours, but under the proposed tax reform, those sales would be subject to sales tax.
Pet services. Whereas currently, boarding your pet and making visits to the veterinarian are not subject to tax, proposed tax reform would change that. Emergency veterinarian visits, however, would not be taxed under the plan.
Groceries. Although groceries are already subject to sales tax in Utah, the task force’s policy proposal would increase the rate at which groceries are taxed by 3.1%. However, lawmakers have also proposed a tax credit to offset this increased rate. More on this will be available in The Times-Independent’s coverage on the tax proposal next week.
Maintenance, repair and installation services. This newly enforced sales tax would apply to services relevant to real property, which primarily means land and buildings. This would mean sales tax applies to lawn services, housing repairs and other home- or business-related maintenance and installation services.
Streaming services. Yes, even Netflix and Hulu are getting caught up in sales tax reform.
Specialized education and instruction. Parents that pay for their kids to have sports instruction, driving school or exam preparation will pay a tax on those sales. Fees for fine arts and language schools will also be subject to sales tax.
Sales of newspapers and newspaper subscriptions. Currently, Utah code exempts the sales of newspapers and newspaper subscriptions from sales tax, an exemption from which The Times-Independent and its subscribers benefit. Legislators have proposed to remove that statewide exemption.
Purchases of renewable and alternative energy. Currently, energy customers around the state who have opted to get their energy from renewable means enjoy an exemption from sales tax when they make those purchases. The proposed tax reform would remove that exemption, making alternative energy subject to sales tax.
Shipping and handling. For taxable sales in Utah that include shipping and handling, the cost of delivery would be subject to sales tax under the new plan.