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Utah Lawmakers Hear from Critics of Proposal to Hike Food Taxes

Research shows that low-income families spend about twice as much of their monthly income on food as middle-income households. (drobotdean/AdobeStock)
Research shows that low-income families spend about twice as much of their monthly income on food as middle-income households. (drobotdean/AdobeStock)

October 24, 2019

SALT LAKE CITY – A proposal to almost triple Utah's food tax to make way for an income-tax cut has critics saying the move could tear some low-income families' budgets apart.

The suggestion is one of several under consideration by the Utah Legislature's Tax Restructuring and Equalization Task Force, which met this week. The plan, proposed by the panel's Republican co-chairs, would add or restore sales taxes on food, gas and services - while cutting income taxes by $79 million.

Alex Cragun, food security advocate with Utahns Against Hunger, said that would hit low-income families hardest because they spend the highest percentage of their income on food.

"Studies have also shown that when families' budgets are stressed, a food budget is the most flexible portion of their budget," he said, "They often forgo things like fresh fruits and vegetables for starchier foods, like potatoes or ramen noodles. That shows to have long-term impacts on families."

The task force was created by the 2019 Legislature. The tax plan's sponsors say their proposal would correct an imbalance between income taxes and taxes on goods and services.

Cragun estimated that raising the sales tax on food to 4.85% would cost an extra $172 to $252 a year for low- and middle-income households. Research has said households at or near the poverty line spend just over one-third of their income on food, while middle-income families spend less than 14%.

"There was a study done in 2016 by Auburn University that found a direct correlation between increases to the sales tax on food and food insecurity," he said. "For every 1% sales taxes are increased, food insecurity in that state rises by 0.6%."

Cragun said there are several ways to mitigate the impact of the tax on low-income Utahns.

"There's a lot of talk about a grocery tax credit that would exempt low-income households from the grocery tax. There are plenty of mechanisms where we can target higher-income households," he said. "The question is whether or not the Legislature would approach those policy options."

The panel is to meet again Nov. 7 to draft a tax bill to be considered in a special legislative session before the end of the year.

The tax proposal is online at le.utah.gov.

Mark Richardson, Public News Service - UT