H.B. 242 Enrolled

REVIEW OF SALES AND USE TAX EXEMPTIONS
2001 GENERAL SESSION
STATE OF UTAH
Sponsor: Greg J. Curtis
Judy Ann Buffmire

This act modifies the Sales and Use Tax Act by amending the Utah Tax Review
Commission's study of sales and use tax exemptions. This act repeals obsolete language and
makes technical changes.
This act affects sections of Utah Code Annotated 1953 as follows:
AMENDS:
59-12-104.5, as last amended by Chapters 126, 272, 288, 289, 290, 341 and 342, Laws of
Utah 1996
Be it enacted by the Legislature of the state of Utah:
Section 1. Section 59-12-104.5 is amended to read:
59-12-104.5. Review of sales tax exemptions.
(1) [The] Beginning with the 2001 interim, the Utah Tax Review Commission, in
cooperation with the governor's office and the [State Tax Commission] tax commission, shall
conduct a review of the [following] sales and use tax exemptions [and related issues created in
Section 59-12-104 within the following period of time:] created by Section 59-12-104 as provided
in this section.
[(a) Subsections 59-12-104 (4), (7), (8), (12), (15), (17), (24), (31), (37), (40) and (43)
before October 1, 1993, and every eight years thereafter;]
[(b) Subsections 59-12-104 (5), (6), (16), (18), (20), (21), (22), (34), and (35) before
October 1, 1994, and every eight years thereafter;]
[(c) except as provided in Subsections (1)(e) and (f), Subsections 59-12-104 (1), (2), (9),
(13), (23), (29), (30), (39), (44), and (45) before October 1, 1995, and every eight years thereafter;]
[(d) Subsections 59-12-104 (10), (11), (14), (19), (25), (26), (27), (28), (32), and (33)
before October 1, 1996, and every eight years thereafter;]
(2) The Utah Tax Review Commission shall:

(a) review each of the sales and use tax exemptions created by Section 59-12-104 one or
more times every eight years; and
(b) subject to Subsection (2)(a) and except as provided in Subsection (3), for each year select
the exemptions that the Utah Tax Review Commission will review for that year.
[(e)] (3) [notwithstanding Subsection (1)(c),] Notwithstanding Subsection (2):
(a) the Utah Tax Review Commission shall review Subsection 59-12-104 [(30)](29) before
October 1 of the year after the year in which Congress permits a state to participate in the special
supplemental nutrition program under 42 U.S.C. Sec. 1786 even if state or local sales taxes are
collected within the state on purchases of food under that program; and
[(f) notwithstanding Subsection (1)(c),] (b) the Utah Tax Review Commission shall review
Subsection 59-12-104 [(23)](22) before October 1 of the year after the year in which Congress
permits a state to participate in the food stamp program under the Food Stamp Act, 7 U.S.C. Sec.
2011 et seq., even if state or local sales taxes are collected within the state on purchases of food
under that program.
[(2) (a)] (4) The Utah Tax Review Commission [and the Revenue and Taxation Interim
Committee] shall for each sales and use tax exemption the Utah Tax Review Commission reviews
make [recommendations] a report to the governor and the [Legislature,] Revenue and Taxation
Interim Committee:
(a) on or before the [October] November interim meeting in the year [the study is required
to be completed under this section, concerning whether the exemption listed in Subsection (1) should
be continued, modified, or repealed.] in which the Utah Tax Review Commission reviews the sales
and use tax exemption;
(b) [In its report to the governor and the Revenue and Taxation Interim Committee, the
commission review shall include at least:] including:
(i) a review of the cost of the sales and use tax exemption;
(ii) a review of the following criteria for granting or extending incentives for businesses:
(A) whether the business [must be] is willing to make a substantial capital investment in
[Utah, signaling] the state indicating that it will be a long-term member of the community in which

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the business is or will be located;
(B) whether the business [must bring] brings new dollars into the state, which generally
means the business must export goods or services outside of [Utah] the state, not just recirculate
existing dollars;
(C) subject to Subsection (5), whether the business [must pay] pays higher than average
wages in the area [where it] in which the business is or will be located, increasing [Utah's] the state's
overall household income [(average wage calculations are not to include local, state, or federal
government or school district employees)];
(D) whether the same incentives offered [the outside] to a new business [must be] locating
in the state from another state are available to existing in-state businesses so as not to discriminate
against [home-grown] the in-state businesses; and
(E) whether the incentives [must] clearly produce a positive return on investment as
determined by state economic modeling formulas;
(iii) a determination of whether the sales and use tax exemption is consistent with the
Legislature's sales and use tax policy positions adopted in [H.J.R. 32 of the] 1990 General Session
H.J.R. 32;
(iv) a review of the purpose [and effectiveness] of the sales and use tax exemption; [and]
(v) a review of the effectiveness of the sales and use tax exemption; and
[(v)] (vi) a review of the benefits of the sales and use tax exemption to the state[.];
(c) recommending whether the sales and use tax exemption should be:
(i) continued;
(ii) modified; or
(iii) repealed; and
(d) reviewing any other issue the Utah Tax Review Commission determines to study.
[(3) Item 43, in H.B. 337, enacted during the 1993 General Session, is transferred from the
Tax Commission to the Tax Review Commission to implement this section.]
(5) For purposes of Subsection (4)(b)(ii)(C), in determining whether a business pays higher
than average wages in the area in which the business is or will be located, the Utah Tax Review

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Commission may not include wages of the following in making average wage calculations:
(a) wages of school district employees;
(b) wages of county, city, or town employees;
(c) wages of state employees; or
(d) wages of federal government employees.

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