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Utah lawmakers once again consider, reject raising sales tax on groceries

  • Sep 6, 2017 | Gail Cole

 Utah lawmakers once again consider increasing the tax rate on groceries.

Utah has taxed sales of grocery food at 1.75 percent since 2007. This is significantly less than the general state rate of 4.7 percent, although local sales taxes bring the combined rate on groceries to 3 percent statewide. Still, some Utahans believe it’s not enough.

Periodically, therefore, state lawmakers propose increasing the tax rate on groceries. The idea was introduced in 2012, when Sen. John Valentine blamed sales tax revenue volatility on the reduced rate. (The increase was approved in the Senate but eventually died.) And it has resurfaced this year.

Back in February, Senate President Wayne Niederhauser said a grocery tax increase was “on the table.” Utah’s sales tax revenue has declined over the years, in part because of the rise of ecommerce and the fact that tax doesn’t apply to all sales by out-of-state sellers, and in part because untaxed services comprise an ever-growing portion of the state’s (and nation’s) economy.

Recognizing the state’s sales tax base is, indeed, shrinking, Gov. Gary Herbert has said he wouldn’t oppose raising the rate on groceries. However, he would only approve such a plan if it included grocery tax relief for “the most vulnerable among us.

Yet by early March, it was clear there would be no new tax on groceries this year.

A swinging pendulum

Now the pendulum is swinging in the other direction: eliminating the sales tax on food altogether. On Wednesday, the idea got a warm reception from members of the legislature’s Revenue and Taxation Interim Committee (Deseret News).

Sen. Deidre Henderson, a mother of five, spoke of shopping with a calculator so she could calculate sales tax and decide how many items to put in her cart. Sen. Jim Dabakis didn’t share a personal story but called a tax on groceries “the most regressive tax humanly imaginable.”

The committee is currently considering ideas for the 2018 legislative session, which starts January. In addition to eliminating the sales tax on groceries, it’s looking at a higher tax for specific foods (i.e., candy, soda). However, that idea has already sparked criticism from Utah Retail Merchants Association President David Davis, who spoke of the complexity such laws tend to engender. That idea is also unpopular with the governor, both for the complexity of administering two different tax rates and for the nanny state effect: “I’m a little reluctant to have government step in and tell you what to eat, and how to eat.”

It will be interesting to see what emerges from these discussions, and what, if anything, is taken up by the legislature next year. 

Sales tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Gail Cole
Avalara Author
Gail Cole
Gail Cole
Avalara Author Gail Cole
Gail began researching and writing about sales tax in 2012 and has been fascinated with it ever since. She has a penchant for uncovering unusual tax facts, and endeavors to make complex sales tax laws more digestible for both experts and laypeople.