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Show For O Against () Initiative B TAX REDUCTIONS Official Ballot Title: Shall a law be enacted to reduce: (1) the individual income tax rates, depending on income, from 2.6 to 2, from 3.55 to 3, from 4.5 to 4, from 5.45 to 5, from 6.4 to 6, and from 7.35 to 7; (2) the state sales tax rate by 12; (3) the tax on motor and special fuels by 5t per gallon; and (4) the tax on cigarettes by 1 1 per pack? IMPARTIAL ANALYSIS Initiative B reduces four different tax rates: individual income, sales, cigarette, and motor and special fuels. 1. Income Tax The Utah Constitution requires that all income tax revenues be used for public education. In 1987 federal and state tax reform changed the Utah income tax base so that it generated more revenue. All of the proposed increase in revenue from this reform was budgeted for public education (kindergarten through 12th grade). In 1988, when actual income tax revenues from the reform exceeded budgeted revenues, the Legislature refunded $80 million and also reduced income tax rates. Initiative B further reduces re-duces the individual income tax rates on state taxable income from: 2.6 to 2 for individuals with incomes not over $750 and for married persons filing joint returns with incomes not over $1,500; 3.55 to 3 for individuals with incomes between $750 and $1,500 and for married persons filing joint returns with incomes between $1,500 and $3,000; 4.5'V. to 4 for individuals with incomes between $1,500 and $2,250 and for married persons filing joint returns with incomes between $3,000 and $4,500; 5.45 to 5 for individuals with incomes between $2,250 and $3,000 and for married persons filing joint returns with incomes between $4,500 and $6,000; 6.4 to 6 for individuals with incomes between $3,000 and $3,750 and for married persons filing joint returns with incomes between $6,000 and $7,500; and 7.35 to 7 for individuals with incomes over $3,750 and for married persons filing joint returns with incomes over $7,500. Fiscal Impact Income tax revenue used to fund public education will be reduced by $35 million. 2. Sales Tax State sales tax is used for the general operations of state government. A portion is also used to fund public education (kindergarten through 12th grade) because the revenue from state income tax is generally not enough. In 1987 the Legislature increased the state sales tax rate by 12. In addition to a state sales tax there is a local sales tax. Undercurrent law, on January 1, 1990, the state sales tax rate will be reduced from 5-332 to 5 to allow the local sales tax rate to be increased by an identical amount, taking it to 1 . The overall rate paid by consumers will not change. However, Initiative B reduces the state sales tax rates by an additional 12, making the state sales tax rate 4-12. Initiative B does not change the rates of the local sales tax. It also does not change the public transit tax (paid by residents of Salt Lake, Utah, Weber, and Davis counties), resort communities tax (paid by residents of certain resort towns), or transient room tax rates (paid by hotel guests). These are all part of the overall sales tax paid. Fiscal Impact State sales tax revenue used to fund general state government operations will be reduced by $59.3 million. 3. Cigarette Tax In 1987 the Legislature increased the cigarette tax by 11 per pack of cigarettes. Part of this increase was designated to fund a prenatal care program. Initiative B reduces the tax on cigarettes by 11 per pack from 23c to 12. Fiscal Impact Cigarette tax revenue used to fund general state government operations will be reduced by $10 million. 4. Motor and Special Fuels Tax The Utah Constitution requires that all taxes on motor fuels be used for highway purposes. In 1987 the Legislature increased the motor and special fuels tax by 5c per gallon. The increase was designated solely for road A"' reconstruction and repair. Initiative B reduces the tax on motor and ;pecial fuels by 5 per gallon from 19 to 14 per gallon. Fiscal Impact Motor fuel tax revenue used for highway purposes will be reduced by $34 million. Special fuel tax revenue used for highway purposes will be reduced by $7.2 million. O Effective Date December 31, 1989 Total Fiscal Impact The Legislative Fiscal Analyst estimates that, if Initiative B passes, the total amount of state revenue reductions will be $145.5 million. Arguments For The 1987 tax hike was passed with little public discussion, and the people were arrogantly denied an opportunity to vote on it. It was so poorly planned it raised $110 million more than it was supposed to. The July special session corrected the mistake by only $60 million and left taxpayers with a "secret" $50 million tax increase on top of the authorized tax increase. ! Approval would: (1) Roll back the 1987 tax increases on income, sales, cigarettes, and gasoline. (2) Eliminate the "secret" $50 million dollar tax increase imposed by mistake. Costs would be: (1) The State Tax Commission estimates that approval of this act would cost $141 million dollars. This would be a 5 cut in the state budget of $2.8 billion dollars or a 2.5 cut from total government spending (state and local) of $5.5 billion (1985-86). (2) Tax Commission estimates did not consider that putting money in the hands of taxpayers would boost the economy and generate revenues, thus making the rollback significantly less than predicted. (3) This initiative combined with Initiative A would cut total state and local spending by 6 using Tax Commission figures, or by less than 4 using figures developed by the Utah Taxpayers Association. Discussion: Utah, based on the ability of its citizens to pay, has some of the highest taxes in the nation. We were 9th highest BEFORE the largest tax hike in the history of the state. We have the highest state and local taxes per household of any of the 10 western states. We rank 48th in per capita income. Relief now will free resources for economic growth. Opponents claim that passage of Initiatives A, B, & C will cause "catastrophic damage to all government services." If a 4";-6 cut will do this, what is the remaining 94-96 of the budgets spent on? Opponents say if we cut taxes we must cut services. Not necessarily so. The rollback would force improved efficiency, more cost-effective ways of providing services or revised priorities. Last December the State Auditor General could not i complete an audit of the State Office of Education because he could not determine what was being spent on the hundreds of programs. Yet, we are told our children are short of textbooks I and supplies although these essentials represent only 1 of the I state budget. Why aren't these critical items purchased first? Despite claims of efficiency, Utah ranks 6th in the nation I in the number of government employees per 1,000 households; 5 has numerous organizations not being audited (Timp Mental 1 Health was being audited, but not effectively) and 60 of state I agencies contracting for services do so on a non-competitive I basis. Every homemaker knows the savings achieved from I comparison shopping. 1 Opponents to Initiatives A, B, & C, have used every scare ' tactic in the book. The same things were said in California and yet in June of this year Californians, after 10 years under Proposition 13, voted to retain tax limitation. Vote FOR Initiative B. J. Bracken Lee, Former Governor Tax Limitation Coalition P.O. Box 26246 Salt Lake City, Utah 84126 Rebuttal to Arguments For Initiative B Proponents claim these tax cuts won't cut basic services. They claim our education system, roads, and economy will improve. If these claims were really true, wouldn't the people who would supposedly receive these benefits support the initiatives? HERE IS WHAT PEOPLE AND ORGANIZATIONS THAT HAVE TAKEN THE TIME TO UNDERSTAND THE INITIATIVES SAY: PTA "The children are hit the hardest by the initiatives. We now spend less than any state per pupil. We dare not risk their future by passing these initiatives. " American Association of Retired Persons "For many retired persons, any modest tax savings are more than offset in Medicaid losses, service losses, and fee increases. " Police ChiefsSheriffs AssociationFire Chiefs "We want to provide a safe and healthy community for Utah. The passage of these initiatives would seriously jeopardize our ability to do so. " Utah Chamber of Commerce Farm Bureau Cattlemen's Association "Our organizations have always supported efficient government and low taxes, but we oppose these initiatives, because they go so far in cutting education and basic services that they threaten our economic future. " AFL-CIO "Working men and women and their families will be the real losers. Ultimately, these initiatives will result in the loss of jobs. " These people realize that supporters' claims are too good to be true. The Initiatives GO TOO FAR! Please join with me and the people of Utah in ensuring a bright and prosperous future for our children and ourselves. VOTE AGAINST INITIATIVE B. For O Against Scott M. Matheson Taxpayers for Utah 1030 South 300 West Salt Lake City, Utah s 0 i : Oj Arguments Against You need the facts to understand the consequences of Initiative B! FACT Basic services we need will be cut! Initiative B forces large cuts in services. Of the state operating budget, 52 is for public education, 19 for higher education, 8 for Social Services, 5 for Corrections, and 5 for Health. Administrative costs are low. Utah's state, city, and county governments have fewer employees per 10,000 population than any state in the nation. If Initiative B passes, the large reductions required cannot be made only through cuts in administration. Basic services will be cut! The cuts will cause Utah to lose substantial federal funding! Federal dollars fund many state programs. Most federal grants require the state to "match" with some state dollars. In many programs, for every state dollar cut, three federal dollars will be lost. In the interstate road construction program, for every six state dollars cut, ninety-four dollars will be lost! FACT To prosper, businesses need the basic services Initiative B would cut! Businesses, like people, grow in good places to live. The Grant Thornton study shows that businesses demand good schools, highways, and police services. These things are more important to business than just lower state taxes. If basic I services are cut, Utah will not be attractive to business. Utah will not be a place where businesses or people can grow or prosper. FACT Initiative B goes too far! No other state has approved such massive tax cuts. Even California refused to approve an income tax reduction. Now you are being asked to pass Initiative B, which goes far beyond the one rejected by California. It reduces cigarette, gasoline, sales, and income taxes. The total impact is over $141,000,000. A tax cut of this size requires budget cuts of 13 in state services. Initiative B goes too far! FACT Initiative B cuts taxes needed to pay for education, health, prisons, and roads! Our taxes provide the funding for education, roads, health care, prisons, and other vital services. If Initiative B passes, funding for these essential services will be cut! FACT Supporters are not responsible to you! Tax protestors refuse to admit that cuts will hurt Utahns. They refuse to answer how services will be maintained: Exactly what programs will be cut? What services will be lost? How can over $330,000,000 be cut in Initiatives A, B, andC without hurting children, elderly and families? Unlike officials you elect, the supporters of Initiative B do not answer to you. FACT People who understand the consequences oppose the initiatives! Every responsible business, community, education, civic, and political leader who understands the consequences is publicly against Initiatives A and B. These are leaders who have ! to answer your questions about what tax cuts will do to you. They know these tax cuts will cripple Utah for years! These facts are not scare tactics. They are just plain scary. INITIATIVE A AND B GO TOO FAR. KNOW THE FACTS! UNDERSTAND THE CONSEQUENCES! Vote AGAINST Initiative B! Scott M. Matheson Taxpayers for Utah 1030 South 300 West Salt Lake City, Utah Rebuttal to Arguments Against Initiative H QUESTION Why cut basic services before cutting waste? The Governor's Commission on Cost Effective Government Govern-ment found $40 to $60 million dollars waste in only three tax-supported organizations. (Sept. '88) How much waste would a similar commission find if it examined all government organizations? QUESTION Why make cuts where they would cause loss of federal funds? The 1987 tax hike brought no additional federal funds; why should we lose them when it is repealed? FACT Businesses need a tax break. In a KSLDeseret News poll late last year, 49 of businesses said high taxes were the majorobstacle to expansion. 21 said their greatest concern was staying in business. QUESTION Since the 1987 tax hike was sold as a 5 increase, why when repealed does it become a 13 cut? $141 million dollars is 5 of the total state budget of $2.8 billion. FACT Initiatives A & B are about making government responsible to the voters, not about voting for supporters of A, B, & C. Initiatives A & B allow voters to set limits on government spending. FACT Almost every organization, union, and individual opposing passage of A, B, & C has interest in government funding. Many, including the major media and the labor unions (UEA and UPEA), have given huge amounts of money to oppose the initiatives. Threats to cut essential services are typical of those protecting bureaucratic turf and inefficiency. ROLLBACK OF THE 1987 TAX INCREASE IS ESSENTIAL TO UTAH'S ECONOMIC RECOVERY. Vote FOR Initiative B. " J. Bracken Lee, Former Governor Tax Limitation Coalition P.O. Box 26246 Salt Lake City, Utah 84126 COMPLETE TEXT OF INITIATIVE B TAX REDUCTIONS ( (The People's Tax Reduction Act) AN ACT REDUCING THE RATE OF STATE INCOME, SALES, MOTOR FUEL, AND TOBACCO PRODUCTS TAXES TO 1986 LEVELS; PROVIDING AN EFFECTIVE DATE. BE IT ENACTED BY THE LEGISLATURE OR BY THE PEOPLE OF THE STATE OF UTAH: SECTION 1. Section 59-10-104, Utah Code Annotated 1953, as renumbered and amended by Chapter 2, Laws of Utah 1987, is repealed and re-enacted to read: 59-10-104. A tax is hereby imposed on the state taxable income, as defined in Sections 59-10-111 and 59-10-112, of every resident individual, determined: (1) In the case of every individual, other than a husband and wife or head of household required to use the tax table set forth in Subsection (2), a tax in accordance with the following table: If the slate taxable income is: The tax is: Not over $750 2 of the state taxable income Over $750 but not over $1,500 $15, plus 3 of excess over $750 Over $1,500 but not over $2,250 $38, plus 4 of excess over $1,500 Over $2,250 but not over $3,000 $68, plus 5 of excess over $2,250 Over $3,000 but not over $3,750 $105, plus 6 of excess over $3,000 Over $3,750 $150, plus 7 of excess over $3,750 (2) In the case of a husband and wife filing a single return jointly, or a head of a household (as defined in section 2(b), Internal Revenue Code of 1954, as hereafter amended, redesignated, or re-enacted) re-enacted) filing a single return, a tax in accordance with the following table: If the state taxable income is: The tax is: Not over $1,500 2 of the state taxable income Over $1,500 but not over $3,000 $30, plus 3 of excess over $1,500 Over $3,000 but not over $4,500 $87, plus 4 of excess over $3,000 Over $4,500 but not over $6,000 $147, plus 5 of excess over $4,500 Over $6,000 but not over $7,500 $222, plus 6 of excess over $6,000 Over $7,500 $312, plus 7 of excess over $7,500 SECTION 2. Section 59-12-103, Utah Code Annotated 1953, as last amended by Chapter 148 and 221, Laws of Utah 1987, is repealed and re-enacted to read: 59 12-103. (1) There is levied a tax on the purchaser for the amount paid or charged for the following: (a) retail sales of tangible personal property made within the state; (b) amount paid to common carriers or to telephone or telegraph corporations as defined by Section 54-2-1, whether the corporations are municipally or privately owned, for all transportation, transpor-tation, telephone service or telegraph service; (c) gas, electricity, heat, coal, fuel oil, or other fuels sold or furnished for commercial consumption; (d) gas, electricity, heat, coal, fuel oil, or other fuels sold or furnished for residential use; (e) meals sold; (f) admission to any place of amusement, entertainment, or recreation, including seats and tables reserved or otherwise, and other similar accommodations; (g) services for repairs or renovations of tangible personal property or services to install tangible personal property in connection with other tangible personal property; (h) cleaning or washing of tangible personal property; (i) tourist home, hotel, motel, or trailer court accommodations and services for less than 30 consecutive days; G) laundry and dry cleaning services; (k) leases and rentals of tangible personal property if the property situs is in this state, if the lessee took possession in this state, or if the property is stored, used, or otherwise consumed in this state; and (1) tangible personal property stored, used, or consumed in this state. (2) Except for subsection (1) (d), the rates of the tax levied under Subsection (1) shall be: (a) 5-332 from July 1, 1986, through December31, 1989; and (b) 4-12 from and after January 1, 1990. (3) The rates of the tax levied under Subsection (1) (d) shall be: (a) 2-332 from July 1, 1986, through December 31, 1989; and (b) 1-12 from and after January 1, 1990. SECTION 3. Section 59-13-201, as last amended by Chapter 63 and 139, Laws of Utah 1987, is repealed and re-enacted to read: 59-13-201. (1 ) A tax is imposed at the rate of 14 cents per gallon upon all motor fuel that is sold, used, or received for sale or use in this state. (2) No tax is imposed upon: (a) motor fuel which is brought into and sold in this state in original packages as purely interstate commerce sales; (b) motor fuel which is exported from this state, if proof of actual exportation on forms prescribed by the commission is made within 180 days after exportation. The commission may either collect no tax or upon application refund the tax paid; (c) motor fuel which is sold to the United States, this state, or the political subdivisions of this state, where sale and delivery is made in quantities of 750 gallons or more; or (d) motor fuel or components of motor fuel, which is sold and used in this state and distilled from coal, oil shale, rock asphalt, bituminous sand, or solid hydrocarbons located in this state. (3) All revenue received by the commission under this part shall be deposited daily with the state treasurer and credited to the Transportation Fund. All of the state's increase of such revenue under this part shall be used for the reconstruction and repair of highways, roads, and streets. An appropriation from the Transportation Fund shall be made to the commission to cover expenses incurred in the administration and enforcement of this part and the collection of the motor fuel tax. (4) The Division of Finance shall place an amount equal to the amount received from the sale or use of motorfuel used in motorboats registered under the provisions of the State Boating Act, as determined by the commission, as a restricted revenue account in the General Fund of the state. The funds from this account shall be used for the construction, improvement, operation, and maintenance of state-owned boating facilities and for the payment of the costs and expenses of the Division of Parks and Recreation in administering and enforcing the State Boating Act. (5) (a) The State Tax Commission shall refund annually into the Off-Highway Vehicle Account in the General Fund an amount equal to the lesser of the following: (i) .3 of the motor fuel tax revenues collected under Section 41-11-6, or (ii) $250,000. (b) This amount shall be used as provided in Section 41-22-19. SECTION 4. Section 59-13-301, as last amended by Chapter 139, Laws of Utah 1987, is repealed and re-enacted to read: 59-13-301. (1) A tax is imposed at the rate of 14 cents per gallon on the sale or use of special fuel. (2) No tax is imposed upon special fuel which: (a) is sold or used for any purpose other than to operate ur propel a motor vehicle upon the public highways of the state, but thiS' O exemption applies only in those cases where the purchases or the lasers of special fuel establish to the satisfaction of the commission that the special fuel was used for purposes other than to operate a motor vehicle upon the public highways of the state; (b) is sold to the United States Government or any of its instrumentalities of this state or any of its political subdivisions; or (c) is sold and delivered into a motor vehicle for which the owner or operator possesses an unexpired special fuel tax exemption certificate issued to that owner or operator by the commission as provided in Section 59 13-304 for vehicles powered by certain special fuels. (3) The special fuel tax shall be paid by the user-dealer in all cases where the special fuel is sold within the state and delivered directly into the fuel supply tank of a motorvehicle unless the motor vehicle has a current special fuel permit or a special fuel exemption permit as provided in Sections 59-13-303 and 59-13-304. In all other cases, the tax shall be paid by the user of the special fuel and shall be computed on the amount of fuel used which shall be calculated from the average number of miles per gallon obtained by the user's vehicles. (4) All revenue received by the commission from taxes and license fees under this part shall be deposited daily with the state treasurer and credited to the Transportation Fund. All of the state's o increase of such revenue under this part shall be used for the reconstruction and repair of highways, roads, and streets. An appropriation from the Transportation Fund shall be made to the commission to cover expenses incurred in the administration and enforcement of this part and the collection of the special fuel tax. SECTION 5. Section 59-14-204, Utah Code Annotated 1953, as renumbered and amended by Chapter 2 and 79, Laws of Utah 1987, is repealed and re-enacted to read: 59-14-204. (1) There is levied a tax upon the sale, use, or storage of cigarettes in the state. The rates of the tax levied under Subsection (1) are: (a) .6 cents on each cigarette, for all cigarettes weighing not more than three pounds per thousand cigarettes; and (b) 1.2 cents on each cigarette, for all cigarettes weighing in excess of three pounds per thousand cigarettes. (2) The tax levied under Subsection (1) shall be paid by the-manufacturer, the-manufacturer, jobber, distributor, wholesaler, retailer, user, or consumer. (3) The tax rates specified in this section shall be increased by the State Tax Commission by the same amount as any future reduction in the federal excise tax on cigarettes. SECTION 6. This act shall take effect on December 31, 1989. |