Manufacturers would get new tax breaks under a bill passed Tuesday by a Utah Senate Committee. The move continues a longstanding policy of being business friendly.
Sen. Stuart Adams, R-Layton, wants to expand sales-tax exemptions for manufacturers in his SB 197. The Legislature’s budget makers estimate it could cost state and local governments around $87 million. But Adams argued it will eventually boost Utah’s economy.
“You need to be able to have that economic engine to be able to produce the revenue that we spend,” he said.
The Utah Taxpayers Association and the Utah Mining Association testified in favor of the bill. And Todd Bingham of the Utah Manufacturers Association told the Senate Revenue and Taxation Committee the move could mean $750 million dollars in as little as seven years.
“Manufacturing has the largest payroll in the state and it dwarfs all other payrolls,” he testified. “What does that mean for education? That means state income tax dollars. That means a huge growth in economic development and in education funding.”
But critics said expanding tax breaks for businesses doesn’t make sense, especially for a state stuck at the bottom of national rankings for school funding. Voices for Utah Children and the Utah League of Cities and Towns questioned the move.
Sen. Jim Dabakis, D-Salt Lake City, voted against it.
“Should we not put that money toward other purposes given the fact it is economic opportunity is the goal here [and] a lack of education is also a great deterrent to economic opportunity?”
It’s not clear how far Adams bill will go, because lawmakers are trying to ward off a citizen initiative for school funding. They have talked about restoring the sale tax on food to do it or possibly scaling back some of the $600 million in sales-tax exemptions already on the books.