Utah cities, towns may lose out with sales tax revisions

Proposed revisions to the way state sales tax is collected and distributed could mean some Utah cities and towns will lose out on revenue.

Under the current system, sales tax revenue is split 50-50 between the municipality where the sale happened, or point of sale, and the other cities in the state based on population.

New revisions to the sales tax formula would add in a third measurement based on total payroll. Some cities and towns where populations are small and self-employed workforce is high may lose out on sales tax revenue with the revisions.

There is still discussion on the proposed changes, and the issue is one they are working to solve, said Royce Van Tassell, vice president at Utah Taxpayers Association.

“It’s obviously something we’ll have to work out,” Van Tassell said in a phone interview. “I don’t anticipate that being a big challenge. The data is there, it’s just a matter of making sure we get everything sliced and diced appropriately.”

A city or town’s payroll taxes will determine the size of the portion, Van Tassell said.

The idea behind the new system is to incentivize job creation rather than simply retail stores within a city or town, said Sen. Wayne Niederhauser, R-Sandy. Deseret News