The latest incarnation of a "single-rate sales tax" plan toremodel Utah's sales tax structure would provide significant newmonies for transit projects in Utah's most populous counties.
While that might be good news for Salt Lake City leaders whogenerally favor transit, there is some concern the flat-rate systemwould injure Utah's capital city by taking away sales tax generatedby the LDS Church's downtown mall development.
The latest plan is making the rounds in city halls across thestate as the Utah League of Cities and Towns presents it to many ofthe state's 217 municipalities.
Thursday, the ULCT's legislative team will be at Salt Lake CityHall to provide details.
"We have been working with Rep. Harper, (Wayne Harper, R-WestJordan) to develop an approach that, if it were adopted, we couldlive with," said Roger Tew, ULCT's legislative lobbyist.
The plan would be a "huge coup for vendors," added Lincoln Shurtz,ULCT's legislative coordinator.
Those vendors would no longer have to calculate different salestax figures based on where the sales were occurring, Shurtz said.
While the idea once was to cut Utah's 96 different sales tax ratesto 29 rates, Harper, who is sponsoring a single-rate bill, now wantsto use one simple rate, according to a ULCT report to the CityCouncil. Currently, that rate is being determined but likely will bebetween 6.3 and 6.4 percent, Shurtz said.
The majority of current sales tax rates around the state typicallyrange from 6 percent to 6.6 percent, although rural places likeCastle Dale and Delta go as low as 5.75 percent and resort areas likeAlta go as high as 8.1 percent.
Many of the components of the plan are still under consideration,Harper said. He expects to have a bill drafted in about 10 days.
Under the current plan, a half of 1 percent of that sales taxwould be dedicated to transit projects in several counties, includingWeber, Davis, Salt Lake, Utah, Cache, Tooele, Box Elder and Summit.Weber and Davis already have a half-cent transit tax while Salt LakeCounty has a 7/16th-cent tax. In Utah County, some cities have a one-quarter-cent transit tax while other cities have no such tax. Cache,Tooele and Box Elder counties also have some cities that have transittaxes and some that don't.
The plan would put all cities in those counties under a half-percent tax, Shurtz said. In more rural counties, that half-percentwould be set aside for road projects.
Other "boutique" taxes like ZAP/RAP taxes, resort community taxesand rural hospital taxes would be eliminated after the bonds thatsupport those taxes were paid. Those bonds would be paid off by anincrease in the rates cities that have such taxes can charge. Thoserates would be increased from the current 1 percent city sales tax to1.1 or 1.2 percent, Harper said.
Once the bonds are paid, the money that went to those unique fundswould likely be transferred to a city's general fund to be disbursedas the city wishes, Shurtz said.
But the sticking point for Salt Lake City may be a provision thatcalls for sales taxes from new "large retail" development to bedisbursed throughout the state, based on population. Currently, salestaxes are disbursed on a 50-50 basis with the city where the saleoccurs getting 50 percent of the tax and the other half going into apot to be distributed to all cities, based on population.
Salt Lake City is worried that The Church of Jesus Christ ofLatter-day Saints' $500 million redevelopment of the Crossroads Plazaand ZCMI Center malls would fall under new development and thereforethe city wouldn't benefit as much from the new sales tax revenue theproject will produce.
Deputy city attorney Lynn Pace, who serves as the city'slegislative counsel, said he has been assured redevelopment projects,like the two malls, would remain under the 50-50 system. But cityleaders want to make sure.
"They don't think that's going to be a problem but don't bank onit," Pace told the council.
It "better not include redeveloped shopping malls," CouncilmanEric Jergensen said.
Harper said Tuesday his plan is that existing buildings, even ifthey are redeveloped, would not be affected.
The single-rate tax needs to be passed this legislative sessionbecause the state is implementing the Streamline Sales Tax System(SST) on July 1 of this year so it can charge for Internet andcatalog sales taxes, Tew said. Utah's sales tax system needs to besimplified in order to make way for the SST.
"The league was an early and strong supporter of the StreamlineSales Tax concept," Tew said. "We understand if it is going to work,some administrative simplicity has to happen."
E-mail: bsnyder@desnews.com
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