APPROVED
MINUTES OF THE
REVENUE AND TAXATION INTERIM COMMITTEE
Wednesday, August 30, 2017 • 9:00 a.m. • 210 Senate Building


Members Present:
Sen. Howard A. Stephenson, Chair
Sen. Jim Dabakis
Sen. Lincoln Fillmore
Sen. Deidre M. Henderson
Rep. Joel K. Briscoe
Rep. Gage Froerer
Rep. Ken Ivory
Rep. Karianne Lisonbee
Rep. Daniel McCay
Rep. Jefferson Moss
Rep. Marie H. Poulson
Rep. Tim Quinn
Rep. Douglas V. Sagers
Rep. Jon E. Stanard
Rep. Brad R. Wilson

Members Absent:
Rep. Steve Eliason, Chair
Sen. Curtis S. Bramble

Staff Present:
Mr. Leif G. Elder, Policy Analyst
Ms. Andrea Valenti Arthur, Associate General Counsel
Ms. Shannon C. Halverson, Associate General Counsel
Mr. Brent M. Gage, Legislative Assistant

Note: A copy of related materials and an audio recording of the meeting can be found at www.le.utah.gov.

1. Committee Business
Chair Stephenson called the meeting to order at 9:18 a.m.
2. Sales and Use Tax: Manufacturing Exemption Under Subsection 59-12-104(14)
John Dougall, Utah State Auditor, presented on the Tax Review Commission's 2008 Sales Tax Working Group and answered questions from the committee.

2C - State Auditor's Presentation on Tax Review Commission's 2008 Sales and Use Tax Working Group
2C - State Auditor's Presentation on Tax Review Commission's 2008 Sales and Use Tax Working Group

2A - Sales Tax System Overview
2A - Sales Tax System Overview
Leif G. Elder presented an overview of Utah's sales and use tax system.
John Valentine, Chair, Utah State Tax Commission, spoke to the issue of the sales and use tax base.
Roger Tew, Executive Director, Utah League of Cities and Towns, spoke to the issue of the sales and use tax base.
Leif G. Elder continued the presentation on sales and use tax.

2B - Excerpts from Tax Foundation's 2017 State Business Tax Climate Index
2B - Excerpts from Tax Foundation's 2017 State Business Tax Climate Index
Andrea Valenti Arthur presented on sales and use tax exemptions, in Utah and other states, for manufacturing machinery, equipment, parts, and materials.

2F - Overview of Utah's Manufacturing inputs
2F - Overview of Utah's Manufacturing inputs

2G - Historical Highlights of Manufacturing Sales and Use Tax Exemptions
2G - Historical Highlights of Manufacturing Sales and Use Tax Exemptions

2H - Table of Exemptions for Manufacturing Inputs by State
2H - Table of Exemptions for Manufacturing Inputs by State

2I - Sales and Use Tax Exemption for Manufacturing Machinery by State
2I - Sales and Use Tax Exemption for Manufacturing Machinery by State
Leif G. Elder presented on previous reviews of Utah's sales and use tax exemption for manufacturing machinery, equipment, and parts.

2J - Summary of Reviews of the Manufacturing Sales Tax Exemption
2J - Summary of Reviews of the Manufacturing Sales Tax Exemption
Andrea Valenti Arthur presented draft legislation "Sales and Use Tax Reform."

2K - 2018 General Session draft legislation "Sales and Use Tax Reform" (2018FL0422)
2K - 2018 General Session draft legislation "Sales and Use Tax Reform" (2018FL0422)
Thomas Young, Senior Economist, Office of the Legislative Fiscal Analyst, presented on the static and dynamic impact of eliminating the three-year economic life requirement for manufacturing machinery, equipment, and parts.

2L - LFA Manufacturing Exemption Presentation
2L - LFA Manufacturing Exemption Presentation
Rebecca Rockwell, Commissioner, Utah State Tax Commission, spoke about requirements of the Streamlined Sales Tax Agreement.
Andrea Valenti Arthur responded to questions.
Thomas Young, Senior Economist, Office of the Legislative Fiscal Analyst responded to questions.
Brent Tolbert, Controller, Materion Corp., presented on his experience in Utah's tax environment.
Douglas Carlisle, US Director, Facilities, Varex Imaging Corporation, presented on his experience in Utah's tax environment.
Steven Rasmussen, Associate Director of Operations/Finance, BD Medical, presented his experience in Utah's tax environment.
Todd Vernon, Utah Plant Controller, Edwards Lifesciences, presented on his experience in Utah's tax environment.
The committee recessed for lunch at 12:30 p.m.
The committee reconvened at 12:50 p.m.
3. Centrally Assessed Report Required by Utah Code Subsection 59-2-924(9)
Leif G. Elder presented the statutorily required centrally assessed report.

3 - Centrally Assessed Report
3 - Centrally Assessed Report
Joshua Nielson, Jennifer Hansen, and John Valentine of the Utah State Tax Commission, made suggestions for changing report, discussed impact of findings, and responded to questions.
Lincoln Shurtz, Utah Association of Counties, discussed the centrally assessed report.
4. Sales and Use Tax: Manufacturing Exemption Under Subsection 59-12-104(14)
John Valentine, Chair, and Rebecca Rockwell, Commissioner, Utah State Tax Commission, discussed administrative issues related to the sales and use tax exemption for manufacturing machinery, equipment, and parts.
5. Sales and Use Tax: Food and Food Ingredients
Leif G. Elder presented on the sales taxation of food.

4F - Sales Tax on Food Presentation
4F - Sales Tax on Food Presentation
Shannon C. Halverson presented on the taxation of food and food ingredients in Utah and other states.

4A - State Sales and Use Tax Bases of Food and Food Ingredients Chart
4A - State Sales and Use Tax Bases of Food and Food Ingredients Chart

4D - Streamlined State Status 01-01-17
4D - Streamlined State Status 01-01-17

4C - Grocery Food Sales Tax Flowchart and Table
4C - Grocery Food Sales Tax Flowchart and Table

4B - State Sales and Use Tax Bases of Food and Food Ingredients Map
4B - State Sales and Use Tax Bases of Food and Food Ingredients Map
Andrea Wilko, Economist, Office of the Legislative Fiscal Analyst, responded to questions.
Chair Stephenson discussed earned income tax credits and how they are used in other states.

4G - State EITC Document
4G - State EITC Document
Thomas Young, Senior Economist, Office of the Legislative Fiscal Analyst presented on the fiscal impact and effects of the sales and use tax on food.

4E - LFA Food Tax Presentation
4E - LFA Food Tax Presentation
John Valentine, Chair, Utah State Tax Commission, responded to questions about refundable earned income tax credits.
David Davis, President, Utah Retail Merchants Association, discussed the collection of sales and use tax on food by merchants.
John Valentine, Chair, and Rebecca Rockwell, Commissioner, Utah State Tax Commission, discussed collecting and administering the sales and use tax on food.
Bill Germundson, Make Hunger Visible, discussed removing the sales and use tax on food.
Bill Tibbitts, Director, Coalition of Religious Communities, discussed removing the sales and use tax on food.
Rev. Mary Janda, St. Stephen's Episcopal Church, discussed removing the sales and use tax on food.
LuAnn Stephenson, Anti-Hunger Action Committee, discussed removing the sales and use tax on food.
6. Other Items/Adjourn
Rep. Sagers commented on Utah's business climate.
Roger Tew, Executive Director, League of Cities and Towns, mentioned that removing the sales and use tax on food could have a large impact on local governments.
MOTION: Sen. Dabakis moved to adjourn.The motion passed with a vote of 9 - 0 - 8 .
Yeas - 9Nays- 0Abs- 8
Rep. J. Briscoe
Sen. J. Dabakis
Sen. D. Henderson
Rep. K. Lisonbee
Rep. J. Moss
Rep. T. Quinn
Rep. D. Sagers
Rep. J. Stanard
Sen. H. Stephenson
Sen. C. Bramble
Rep. S. Eliason
Sen. L. Fillmore
Rep. G. Froerer
Rep. K. Ivory
Rep. D. McCay
Rep. M. Poulson
Rep. B. Wilson
Chair Stephenson adjourned the meeting at 3:23 p.m.