SB 42: Partial Elimination of the Annual Tax on Business Supplies
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Over the past few years there have been many discussions about income tax reform for major corporations and individuals as well as a variety of tax increases, but few have been talking about helping small businesses. A large percentage of Utahns are involved in or outright own a small business.
These include home-based businesses, mom-and-pop shops, start-ups in their infancy, and more. When it comes to tax relief, these types of business are often forgotten, as are the onerous taxes that they have to pay. One such tax is known as the “Tangible Personal Property Tax.”
When a business acquires new equipment, machinery, or office furniture it doesn’t just pay tax on those items at the point of sale. Utah law also requires businesses to pay an additional tax every year on this already-purchased property.
This means counting up every desk, chair, computer, machine, etc.—and if the government doesn’t think you did it quite right, you’ll probably be audited. Often times the amount of tax revenue generated from taxing one business is less than the cost it took to collect the tax in the first place.
As a Representative last year, Dan McCay introduced House Bill 375 which would have reduced the burdens of the tax, but it was not voted on in the Senate. That’s why now Senator McCay has introduced Senate Bill 42, an improvement from last year’s bill.
SB 42 would exempt all property that a business has already paid a sales tax on from the tangible personal property tax. This would save businesses approximately $70 million in taxes every year, while reducing the onerous burdens of reporting and audits. The bill removes a provision that requires exempt businesses from still having to fill out a form and send it in to the county accessor every year.
Instead of counting up tables and chairs, businesses should be allowed to focus on delivering the best product or service for their customers. Utah needs to remove these hurdles for small businesses and help them thrive.