H.B. 304

1

REDUCTION IN STATE SALES AND USE
2 TAX RATE ON FOOD AND FOOD
3 INGREDIENTS
4 2008 GENERAL SESSION
5 STATE OF UTAH
6 Chief Sponsor: Larry B. Wiley
7 Senate Sponsor: ____________
8
9 LONG TITLE
10 General Description:
11 This bill amends the Sales and Use Tax Act relating to a tax rate.
12 Highlighted Provisions:
13 This bill:
14 . reduces the state sales and use tax rate imposed on food and food ingredients from
15 1.75% to 1%.
16 Monies Appropriated in this Bill:
17 None
18 Other Special Clauses:
19 This bill takes effect on July 1, 2008.
20 Utah Code Sections Affected:
21 AMENDS:
22 59-12-103, as last amended by Laws of Utah 2007, Chapters 9, 101, 126, 206, and 288
23
24 Be it enacted by the Legislature of the state of Utah:
25 Section 1. Section 59-12-103 is amended to read:
26 59-12-103. Sales and use tax base -- Rates -- Effective dates -- Use of sales and use
27 tax revenues.

28 (1) A tax is imposed on the purchaser as provided in this part for amounts paid or
29 charged for the following transactions:
30 (a) retail sales of tangible personal property made within the state;
31 (b) amounts paid:
32 (i) to a:
33 (A) telephone service provider regardless of whether the telephone service provider is
34 municipally or privately owned; or
35 (B) telegraph corporation:
36 (I) as defined in Section 54-2-1 ; and
37 (II) regardless of whether the telegraph corporation is municipally or privately owned;
38 and
39 (ii) for:
40 (A) telephone service, other than mobile telecommunications service, that originates
41 and terminates within the boundaries of this state;
42 (B) mobile telecommunications service that originates and terminates within the
43 boundaries of one state only to the extent permitted by the Mobile Telecommunications
44 Sourcing Act, 4 U.S.C. Sec. 116 et seq.; or
45 (C) telegraph service;
46 (c) sales of the following for commercial use:
47 (i) gas;
48 (ii) electricity;
49 (iii) heat;
50 (iv) coal;
51 (v) fuel oil; or
52 (vi) other fuels;
53 (d) sales of the following for residential use:
54 (i) gas;
55 (ii) electricity;
56 (iii) heat;
57 (iv) coal;
58 (v) fuel oil; or

59 (vi) other fuels;
60 (e) sales of prepared food;
61 (f) except as provided in Section 59-12-104 , amounts paid or charged as admission or
62 user fees for theaters, movies, operas, museums, planetariums, shows of any type or nature,
63 exhibitions, concerts, carnivals, amusement parks, amusement rides, circuses, menageries,
64 fairs, races, contests, sporting events, dances, boxing matches, wrestling matches, closed circuit
65 television broadcasts, billiard parlors, pool parlors, bowling lanes, golf, miniature golf, golf
66 driving ranges, batting cages, skating rinks, ski lifts, ski runs, ski trails, snowmobile trails,
67 tennis courts, swimming pools, water slides, river runs, jeep tours, boat tours, scenic cruises,
68 horseback rides, sports activities, or any other amusement, entertainment, recreation,
69 exhibition, cultural, or athletic activity;
70 (g) amounts paid or charged for services for repairs or renovations of tangible personal
71 property, unless Section 59-12-104 provides for an exemption from sales and use tax for:
72 (i) the tangible personal property; and
73 (ii) parts used in the repairs or renovations of the tangible personal property described
74 in Subsection (1)(g)(i), whether or not any parts are actually used in the repairs or renovations
75 of that tangible personal property;
76 (h) except as provided in Subsection 59-12-104 (7), amounts paid or charged for
77 assisted cleaning or washing of tangible personal property;
78 (i) amounts paid or charged for tourist home, hotel, motel, or trailer court
79 accommodations and services that are regularly rented for less than 30 consecutive days;
80 (j) amounts paid or charged for laundry or dry cleaning services;
81 (k) amounts paid or charged for leases or rentals of tangible personal property if within
82 this state the tangible personal property is:
83 (i) stored;
84 (ii) used; or
85 (iii) otherwise consumed;
86 (l) amounts paid or charged for tangible personal property if within this state the
87 tangible personal property is:
88 (i) stored;
89 (ii) used; or

90 (iii) consumed; and
91 (m) amounts paid or charged for prepaid telephone calling cards.
92 (2) (a) Except as provided in Subsections (2)(b) through (e), a state tax and a local tax
93 is imposed on a transaction described in Subsection (1) equal to the sum of:
94 (i) a state tax imposed on the transaction at a tax rate of 4.65%; and
95 (ii) a local tax equal to the sum of the tax rates a county, city, or town imposes on the
96 transaction under this chapter other than this part.
97 (b) Except as provided in Subsection (2)(d) or (e), a state tax and a local tax is imposed
98 on a transaction described in Subsection (1)(d) equal to the sum of:
99 (i) a state tax imposed on the transaction at a tax rate of 2%; and
100 (ii) a local tax equal to the sum of the tax rates a county, city, or town imposes on the
101 transaction under this chapter other than this part.
102 (c) Except as provided in Subsection (2)(d) or (e), beginning on January 1, 2007, a
103 state tax and a local tax is imposed on amounts paid or charged for food and food ingredients
104 equal to the sum of:
105 (i) a state tax imposed on the amounts paid or charged for food and food ingredients at
106 a tax rate of [1.75%] 1%; and
107 (ii) a local tax equal to the sum of the tax rates a county, city, or town imposes on the
108 amounts paid or charged for food and food ingredients under this chapter other than this part.
109 (d) Except as provided in Subsection (2)(e), if a seller collects a tax in accordance with
110 Subsection 59-12-107 (1)(b) on a transaction described in Subsection (1), a state tax and a local
111 tax is imposed on the transaction equal to the sum of:
112 (i) a state tax imposed on the transaction at a tax rate of:
113 (A) 4.65% for a transaction other than a transaction described in Subsection
114 (2)(d)(i)(B) or (2)(d)(i)(C);
115 (B) 2% for a transaction described in Subsection (1)(d); or
116 (C) beginning on January 1, 2007, 1.75% on the amounts paid or charged for food and
117 food ingredients; and
118 (ii) a local tax imposed on the transaction at a tax rate equal to the sum of the following
119 tax rates:
120 (A) the tax rate authorized by Section 59-12-204 , but only if all of the counties, cities,

121 and towns in the state impose the tax authorized by Section 59-12-204 ; and
122 (B) the tax rate authorized by Section 59-12-1102 , but only if all of the counties in the
123 state impose the tax authorized by Section 59-12-1102 .
124 (e) (i) A state tax and a local tax is imposed on an entire bundled transaction as
125 provided in this Subsection (2)(e) if the bundled transaction is attributable to food and food
126 ingredients and tangible personal property other than food and food ingredients.
127 (ii) If the tax on a bundled transaction described in Subsection (2)(e)(i) is collected by a
128 seller other than a seller that collects a tax in accordance with Subsection 59-12-107 (1)(b),
129 beginning on January 1, 2007, a state tax and a local tax is imposed on the entire bundled
130 transaction equal to the sum of:
131 (A) a state tax imposed on the entire bundled transaction at the tax rate described in
132 Subsection (2)(a)(i); and
133 (B) a local tax imposed on the entire bundled transaction at the sum of the tax rates
134 described in Subsection (2)(a)(ii).
135 (iii) If the tax on a bundled transaction described in Subsection (2)(e)(i) is collected by
136 a seller in accordance with Subsection 59-12-107 (1)(b), beginning on January 1, 2007, a state
137 tax and a local tax is imposed on the entire bundled transaction equal to the sum of:
138 (A) a state tax imposed on the entire bundled transaction at the tax rate described in
139 Subsection (2)(d)(i)(A); and
140 (B) a local tax imposed on the entire bundled transaction at a tax rate equal to the sum
141 of the following tax rates:
142 (I) the tax rate authorized by Section 59-12-204 , but only if all of the counties, cities,
143 and towns in the state impose the tax authorized by Section 59-12-204 ; and
144 (II) the tax rate authorized by Section 59-12-1102 , but only if all of the counties in the
145 state impose the tax authorized by Section 59-12-1102 .
146 (f) Subject to Subsections (2)(g) and (h), a tax rate repeal or tax rate change for a tax
147 rate imposed under the following shall take effect on the first day of a calendar quarter:
148 (i) Subsection (2)(a)(i);
149 (ii) Subsection (2)(b)(i);
150 (iii) Subsection (2)(c)(i);
151 (iv) Subsection (2)(d)(i);

152 (v) Subsection (2)(e)(ii)(A); or
153 (vi) Subsection (2)(e)(iii)(A).
154 (g) (i) For a transaction described in Subsection (2)(g)(iii), a tax rate increase shall take
155 effect on the first day of the first billing period that begins after the effective date of the tax rate
156 increase if the billing period for the transaction begins before the effective date of a tax rate
157 increase imposed under:
158 (A) Subsection (2)(a)(i);
159 (B) Subsection (2)(b)(i);
160 (C) Subsection (2)(c)(i);
161 (D) Subsection (2)(d)(i);
162 (E) Subsection (2)(e)(ii)(A); or
163 (F) Subsection (2)(e)(iii)(A).
164 (ii) For a transaction described in Subsection (2)(g)(iii), the repeal of a tax or a tax rate
165 decrease shall take effect on the first day of the last billing period that began before the
166 effective date of the repeal of the tax or the tax rate decrease if the billing period for the
167 transaction begins before the effective date of the repeal of the tax or the tax rate decrease
168 imposed under:
169 (A) Subsection (2)(a)(i);
170 (B) Subsection (2)(b)(i);
171 (C) Subsection (2)(c)(i);
172 (D) Subsection (2)(d)(i);
173 (E) Subsection (2)(e)(ii)(A); or
174 (F) Subsection (2)(e)(iii)(A).
175 (iii) Subsections (2)(g)(i) and (ii) apply to transactions subject to a tax under:
176 (A) Subsection (1)(b);
177 (B) Subsection (1)(c);
178 (C) Subsection (1)(d);
179 (D) Subsection (1)(e);
180 (E) Subsection (1)(f);
181 (F) Subsection (1)(g);
182 (G) Subsection (1)(h);

183 (H) Subsection (1)(i);
184 (I) Subsection (1)(j); or
185 (J) Subsection (1)(k).
186 (h) (i) For a tax rate described in Subsection (2)(h)(ii), if a tax due on a catalogue sale
187 is computed on the basis of sales and use tax rates published in the catalogue, a tax rate repeal
188 or change in a tax rate takes effect:
189 (A) on the first day of a calendar quarter; and
190 (B) beginning 60 days after the effective date of the tax rate repeal or tax rate change.
191 (ii) Subsection (2)(h)(i) applies to the tax rates described in the following:
192 (A) Subsection (2)(a)(i);
193 (B) Subsection (2)(b)(i);
194 (C) Subsection (2)(c)(i);
195 (D) Subsection (2)(d)(i);
196 (E) Subsection (2)(e)(ii)(A); or
197 (F) Subsection (2)(e)(iii)(A).
198 (iii) In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act,
199 the commission may by rule define the term "catalogue sale."
200 (3) (a) Except as provided in Subsections (4) through (10), the following state taxes
201 shall be deposited into the General Fund:
202 (i) the tax imposed by Subsection (2)(a)(i);
203 (ii) the tax imposed by Subsection (2)(b)(i);
204 (iii) the tax imposed by Subsection (2)(c)(i);
205 (iv) the tax imposed by Subsection (2) (d)(i);
206 (v) the tax imposed by Subsection (2)(e)(ii)(A); and
207 (vi) the tax imposed by Subsection (2)(e)(iii)(A).
208 (b) The following local taxes shall be distributed to a county, city, or town as provided
209 in this chapter:
210 (i) the tax imposed by Subsection (2)(a)(ii);
211 (ii) the tax imposed by Subsection (2)(b)(ii);
212 (iii) the tax imposed by Subsection (2)(c)(ii); and
213 (iv) the tax imposed by Subsection (2)(e)(ii)(B).

214 (c) (i) Notwithstanding any provision of this chapter, each county, city, or town in the
215 state shall receive the county's, city's, or town's proportionate share of the revenues generated
216 by the following local taxes as provided in Subsection (3)(c)(ii):
217 (A) the local tax described in Subsection (2)(d)(ii); and
218 (B) the local tax described in Subsection (2)(e)(iii)(B).
219 (ii) For revenues generated by a tax described in Subsection (3)(c)(i), the commission
220 shall determine a county's, city's, or town's proportionate share of the revenues by:
221 (A) calculating an amount equal to the population of the unincorporated area of the
222 county, city, or town divided by the total population of the state; and
223 (B) multiplying the amount determined under Subsection (3)(c)(ii)(A) by the total
224 amount of revenues generated by the taxes described in Subsection (3)(c)(i) for all counties,
225 cities, and towns.
226 (iii) (A) Except as provided in Subsection (3)(c)(iii)(B), population figures for
227 purposes of this section shall be derived from the most recent official census or census estimate
228 of the United States Census Bureau.
229 (B) If a needed population estimate is not available from the United States Census
230 Bureau, population figures shall be derived from the estimate from the Utah Population
231 Estimates Committee created by executive order of the governor.
232 (4) (a) Notwithstanding Subsection (3)(a), for a fiscal year beginning on or after July 1,
233 2003, the lesser of the following amounts shall be used as provided in Subsections (4)(b)
234 through (g):
235 (i) for taxes listed under Subsection (3)(a), the amount of tax revenue generated:
236 (A) by a 1/16% tax rate on the transactions described in Subsection (1); and
237 (B) for the fiscal year; or
238 (ii) $17,500,000.
239 (b) (i) For a fiscal year beginning on or after July 1, 2003, 14% of the amount
240 described in Subsection (4)(a) shall be transferred each year as dedicated credits to the
241 Department of Natural Resources to:
242 (A) implement the measures described in Subsections 63-34-14 (4)(a) through (d) to
243 protect sensitive plant and animal species; or
244 (B) award grants, up to the amount authorized by the Legislature in an appropriations

245 act, to political subdivisions of the state to implement the measures described in Subsections
246 63-34-14 (4)(a) through (d) to protect sensitive plant and animal species.
247 (ii) Money transferred to the Department of Natural Resources under Subsection
248 (4)(b)(i) may not be used to assist the United States Fish and Wildlife Service or any other
249 person to list or attempt to have listed a species as threatened or endangered under the
250 Endangered Species Act of 1973, 16 U.S.C. Sec. 1531 et seq.
251 (iii) At the end of each fiscal year:
252 (A) 50% of any unexpended dedicated credits shall lapse to the Water Resources
253 Conservation and Development Fund created in Section 73-10-24 ;
254 (B) 25% of any unexpended dedicated credits shall lapse to the Utah Wastewater Loan
255 Program Subaccount created in Section 73-10c-5 ; and
256 (C) 25% of any unexpended dedicated credits shall lapse to the Drinking Water Loan
257 Program Subaccount created in Section 73-10c-5 .
258 (c) For a fiscal year beginning on or after July 1, 2003, 3% of the amount described in
259 Subsection (4)(a) shall be deposited each year in the Agriculture Resource Development Fund
260 created in Section 4-18-6 .
261 (d) (i) For a fiscal year beginning on or after July 1, 2003, 1% of the amount described
262 in Subsection (4)(a) shall be transferred each year as dedicated credits to the Division of Water
263 Rights to cover the costs incurred in hiring legal and technical staff for the adjudication of
264 water rights.
265 (ii) At the end of each fiscal year:
266 (A) 50% of any unexpended dedicated credits shall lapse to the Water Resources
267 Conservation and Development Fund created in Section 73-10-24 ;
268 (B) 25% of any unexpended dedicated credits shall lapse to the Utah Wastewater Loan
269 Program Subaccount created in Section 73-10c-5 ; and
270 (C) 25% of any unexpended dedicated credits shall lapse to the Drinking Water Loan
271 Program Subaccount created in Section 73-10c-5 .
272 (e) (i) For a fiscal year beginning on or after July 1, 2003, 41% of the amount described
273 in Subsection (4)(a) shall be deposited in the Water Resources Conservation and Development
274 Fund created in Section 73-10-24 for use by the Division of Water Resources.
275 (ii) In addition to the uses allowed of the Water Resources Conservation and

276 Development Fund under Section 73-10-24 , the Water Resources Conservation and
277 Development Fund may also be used to:
278 (A) conduct hydrologic and geotechnical investigations by the Division of Water
279 Resources in a cooperative effort with other state, federal, or local entities, for the purpose of
280 quantifying surface and ground water resources and describing the hydrologic systems of an
281 area in sufficient detail so as to enable local and state resource managers to plan for and
282 accommodate growth in water use without jeopardizing the resource;
283 (B) fund state required dam safety improvements; and
284 (C) protect the state's interest in interstate water compact allocations, including the
285 hiring of technical and legal staff.
286 (f) For a fiscal year beginning on or after July 1, 2003, 20.5% of the amount described
287 in Subsection (4)(a) shall be deposited in the Utah Wastewater Loan Program Subaccount
288 created in Section 73-10c-5 for use by the Water Quality Board to fund wastewater projects.
289 (g) For a fiscal year beginning on or after July 1, 2003, 20.5% of the amount described
290 in Subsection (4)(a) shall be deposited in the Drinking Water Loan Program Subaccount
291 created in Section 73-10c-5 for use by the Division of Drinking Water to:
292 (i) provide for the installation and repair of collection, treatment, storage, and
293 distribution facilities for any public water system, as defined in Section 19-4-102 ;
294 (ii) develop underground sources of water, including springs and wells; and
295 (iii) develop surface water sources.
296 (5) (a) Notwithstanding Subsection (3)(a), for a fiscal year beginning on or after July 1,
297 2006, the difference between the following amounts shall be expended as provided in this
298 Subsection (5), if that difference is greater than $1:
299 (i) for taxes listed under Subsection (3)(a), the amount of tax revenue generated for the
300 fiscal year by a 1/16% tax rate on the transactions described in Subsection (1); and
301 (ii) $17,500,000.
302 (b) (i) The first $500,000 of the difference described in Subsection (5)(a) shall be:
303 (A) transferred each fiscal year to the Department of Natural Resources as dedicated
304 credits; and
305 (B) expended by the Department of Natural Resources for watershed rehabilitation or
306 restoration.

307 (ii) At the end of each fiscal year, 100% of any unexpended dedicated credits described
308 in Subsection (5)(b)(i) shall lapse to the Water Resources Conservation and Development Fund
309 created in Section 73-10-24 .
310 (c) (i) After making the transfer required by Subsection (5)(b)(i), $150,000 of the
311 remaining difference described in Subsection (5)(a) shall be:
312 (A) transferred each fiscal year to the Division of Water Resources as dedicated
313 credits; and
314 (B) expended by the Division of Water Resources for cloud-seeding projects
315 authorized by Title 73, Chapter 15, Modification of Weather.
316 (ii) At the end of each fiscal year, 100% of any unexpended dedicated credits described
317 in Subsection (5)(c)(i) shall lapse to the Water Resources Conservation and Development Fund
318 created in Section 73-10-24 .
319 (d) After making the transfers required by Subsections (5)(b) and (c), 94% of the
320 remaining difference described in Subsection (5)(a) shall be deposited into the Water
321 Resources Conservation and Development Fund created in Section 73-10-24 for use by the
322 Division of Water Resources for:
323 (i) preconstruction costs:
324 (A) as defined in Subsection 73-26-103 (6) for projects authorized by Title 73, Chapter
325 26, Bear River Development Act; and
326 (B) as defined in Subsection 73-28-103 (8) for the Lake Powell Pipeline project
327 authorized by Title 73, Chapter 28, Lake Powell Pipeline Development Act;
328 (ii) the cost of employing a civil engineer to oversee any project authorized by Title 73,
329 Chapter 26, Bear River Development Act;
330 (iii) the cost of employing a civil engineer to oversee the Lake Powell Pipeline project
331 authorized by Title 73, Chapter 28, Lake Powell Pipeline Development Act; and
332 (iv) other uses authorized under Sections 73-10-24 , 73-10-25.1 , 73-10-30 , and
333 Subsection (4)(e)(ii) after funding the uses specified in Subsections (5)(d)(i) through (iii).
334 (e) Any unexpended monies described in Subsection (5)(d) that remain in the Water
335 Resources Conservation and Development Fund at the end of the fiscal year are nonlapsing.
336 (f) After making the transfers required by Subsections (5)(b) and (c) and subject to
337 Subsection (5)(g), 6% of the remaining difference described in Subsection (5)(a) shall be

338 transferred each year as dedicated credits to the Division of Water Rights to cover the costs
339 incurred for employing additional technical staff for the administration of water rights.
340 (g) At the end of each fiscal year, any unexpended dedicated credits described in
341 Subsection (5)(f) over $150,000 lapse to the Water Resources Conservation and Development
342 Fund created in Section 73-10-24 .
343 (6) Notwithstanding Subsection (3)(a), for a fiscal year beginning on or after July 1,
344 2003, and for taxes listed under Subsection (3)(a), the amount of revenue generated by a 1/16%
345 tax rate on the transactions described in Subsection (1) for the fiscal year shall be deposited in
346 the Transportation Fund created by Section 72-2-102 .
347 (7) (a) Notwithstanding Subsection (3)(a) and until Subsection (7)(b) applies,
348 beginning on January 1, 2000, the Division of Finance shall deposit into the Centennial
349 Highway Fund Restricted Account created in Section 72-2-118 a portion of the taxes listed
350 under Subsection (3)(a) equal to the revenues generated by a 1/64% tax rate on the taxable
351 transactions under Subsection (1).
352 (b) Notwithstanding Subsection (3)(a), when the highway general obligation bonds
353 have been paid off and the highway projects completed that are intended to be paid from
354 revenues deposited in the Centennial Highway Fund Restricted Account as determined by the
355 Executive Appropriations Committee under Subsection 72-2-118 (6)(d), the Division of
356 Finance shall deposit into the Transportation Investment Fund of 2005 created by Section
357 72-2-124 a portion of the taxes listed under Subsection (3)(a) equal to the revenues generated
358 by a 1/64% tax rate on the taxable transactions under Subsection (1).
359 (8) (a) Notwithstanding Subsection (3)(a), for fiscal years beginning on or after fiscal
360 year 2004-05, the commission shall each year on or before the September 30 immediately
361 following the last day of the fiscal year deposit the difference described in Subsection (8)(b)
362 into the Remote Sales Restricted Account created in Section 59-12-103.2 if that difference is
363 greater than $0.
364 (b) The difference described in Subsection (8)(a) is equal to the difference between:
365 (i) the total amount of the revenues the commission received from sellers collecting the
366 taxes described in Subsections (2)(d)(i) and (2)(e)(iii)(A) for the fiscal year immediately
367 preceding the September 30 described in Subsection (8)(a); and
368 (ii) $7,279,673.

369 (9) (a) Notwithstanding Subsection (3)(a), in addition to the amount deposited in
370 Subsection (7)(a), and until Subsection (9)(b) applies, for a fiscal year beginning on or after
371 July 1, 2007, the Division of Finance shall deposit into the Centennial Highway Fund
372 Restricted Account created by Section 72-2-118 a portion of the taxes listed under Subsection
373 (3)(a) equal to 8.3% of the revenues collected from the following taxes, which represents a
374 portion of the approximately 17% of sales and use tax revenues generated annually by the sales
375 and use tax on vehicles and vehicle-related products:
376 (i) the tax imposed by Subsection (2)(a)(i);
377 (ii) the tax imposed by Subsection (2)(b)(i);
378 (iii) the tax imposed by Subsection (2)(c)(i); and
379 (iv) the tax imposed by Subsection (2)(e)(ii)(A).
380 (b) Notwithstanding Subsection (3)(a) and in addition to the amounts deposited under
381 Subsection (7)(b), when the highway general obligation bonds have been paid off and the
382 highway projects completed that are intended to be paid from revenues deposited in the
383 Centennial Highway Fund Restricted Account as determined by the Executive Appropriations
384 Committee under Subsection 72-2-118 (6)(d), the Division of Finance shall deposit into the
385 Transportation Investment F