On Friday, our counsel notified us that any significant changes in Utah’s sales tax structure could have a negative effect on bonds issued by the State’s political subdivisions.
Letter from Bond Counsel
Official Press Release
This has serious ramifications for how we go about removing Utah’s sales tax on food. It also impacts any large business sales tax cut.
Further, it has implications for the state’s flexibility to lower taxes.
The first step is to make sure the problem doesn’t get worse. Senator Hillyard's bill, SB 166
, imposes an immediate moratorium on issuance of new bonds guaranteed by sales tax revenue collected by political subdivisions, pending further analysis of the situation.
The next step is to get creative and figure out a way to provide effective tax relief without endangering Utah's phenomenal credit rating or reputation as one of the best financially managed states in the nation.