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Under the auspices of "streamlining," Utah has enacted a bill to extort businesses, destroy its small business-based economy, and stab fiscal responsibility and state sovereignty in the back.

During the 2003 session, the legislature passed Senate Bill 147S1, "Streamlined Sales Tax Project Amendments." This 208-page, complex bill drastically alters Utah’s sales tax laws and brings Utah under the multi-state Streamlined Sales Tax Project (SSTP). It specifically targeted out-of-state catalog and Internet sales, and, according to the Utah State Tax Commission, was supposed to raise taxes by $130 million each year.

Streamlining taxes is a catchy ploy. SSTP does, in fact, contain provisions to improve tax system efficiency and reduce audits for businesses. But the devil is easily seen in the details, including provisions and definitions that will, in all likelihood, reduce competition and sovereignty among local and state tax jurisdictions and increase taxes.

In the battle to limit taxes and spending, definitions are a big deal, and the way those definitions are formed and enforced are an even bigger deal.

Take the Multistate Tax Commission (MTC), for example, currently comprised of 44 states and the District of Columbia ranging from active members to observers. MTC organizes conferences throughout the year to formulate SSTP tax code definitions.

In Indianapolis, Indiana in April 2003 an MTC group of 150 state revenue bureaucrats, lawmakers, and businesses discussed the tax implications of defining a "bundled transaction," and whether various changes would tax services that currently are not taxed.

Another discussion arose regarding a uniform definition for "television services" to include cable, satellite, and dish providers – a situation in which a crafty definition could increase taxes. North Carolina officials are already salivating, and plan to impose a de facto tax increase on postage in certain cases by changing business service definitions.

Can anyone seriously argue that cash-strapped states will not use these "simplified" definitions to raise taxes? States will still choose to tax or exempt every service and sale, but will codify each service and sale according to SSTP-approved guidelines.

While states will reserve the right to levy different rates against similarly defined products and services, they will be pressured to levy taxes in similar fashion to higher-tax states. States joining SSTP and adopting its recommendation will seriously compromise their sovereignty with regard to maintaining competitive tax code definitions of their own.

Big government advocates have claimed that SB 147 S1 is not a tax at all – but rather a voluntary opportunity for businesses to contribute more to state government coffers.

What they don’t talk about is SB 147 S1’s stipulation that businesses that go along with the SSTP project now will not incur liability for past failures to collect sales taxes when STTP is fully functioning. In other words, these government extortionists have implicitly warned businesses that if they don’t pay their "voluntary" protection fees today, Guido will rummage through their past records tomorrow – looking for something to hang them with.

Indeed, the biggest losers of SB 147S1 and STTP will be businesses – ever-vulnerable targets for sleight-of-hand definition changes. American businesses already contribute $378.9 billion in state and local taxes (2002) and 41.3% of all tax collections. Smaller-sized businesses are most at risk, because they do not have the staff or resources to lobby for advantageous definitions at MTC planning meetings (ironically, big government advocates claimed that SB 147S1 was necessary to "protect brick and mortar" establishments).

Which brings us back to Utah, already the ninth-highest taxed state in the nation. Tax-and-spend Governor Michael O. Leavitt, a long-time advocate of Internet taxes, has been joined by the Republican-controlled legislature in passing SB 147S1. With 62 percent of Utah businesses operating with ten employees or less, one would think that SB 147S1 would have been resoundingly defeated.

The opposite occurred, however. Utah lawmakers appear blindly determined to torpedo the fragile boat that feeds Utah families and continues to float their unstable economy.

In addition, the Utah Taxpayers Association (UTA), purportedly a voice against tax increases, actively lobbied for the bill’s passage. UTA President Howard Stephenson, also a state senator and a Taxpayer Protection Pledge signer, voted in favor of this tax increase.

When the legislature was recently informed that revenue estimates from SB 147S1 had dropped from $130 million to $30 million, Stephenson’s disappointed response was: "Is that all?"

With leadership like this, who needs enemies?

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Accountability Utah Note for Readers: Emily Sedgwick is State Project Manager for Americans for Tax Reform (ATR), the largest taxpayer advocate organization in America.  Grover Norquist, President of ATR, has Pres. Bush's attention on taxes and is largely responsible for the success of the latest federal tax cut.

From ATR's mission statement: "ATR opposes all tax increases as a matter of principle.  We believe in a system in which taxes are simpler, fairer, flatter, more visible, and lower than they are today.  The government’s power to control one’s life derives from its power to tax.  We believe that power should be minimized."  For more information on ATR, see www.atr.org. 

Permission to reprint this article is hereby granted provided that the author, Accountability Utah, and Americans for Tax Reform are cited.  See the Taxes & Spending section of our Issues & Alerts page for more information on Utah taxes, including the poor performance of both parties on tax issues.  If you need help finding your legislator, visit our elected official contact page.

Click on Accountability Utah's cartoon below for an artist's rendition of the state of affairs for Utah taxpayers.

If you have comments or suggestions, please email us at info@accountabilityutah.org.

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