Governor Gary Herbert made comments on the potential effects of proposed tax reform on the Uintah Basin economy during a meeting Wednesday with the Utah Broadcast Association. While Governor Herbert spoke of the need for tax reform during his State of the State address in January, HB441 has taken many Utahns by surprise, particularly those in the service industries that will be faced with the new sales tax on services if the bill passes. Herbert explained on Wednesday his belief that Utah’s tax policy should be one that is equitable with all parts of the economy paying a fair share and that HB441 aims to shift sales tax structure to account for a 30-year shift of the state’s tax base. Since HB441 was introduced last week, Uintah Basin leaders and citizens have pushed back with concerns that the new tax will unfairly target the oil and gas industry already operating on thin margins and as a result further hit the struggling economy. In response to these concerns Governor Herbert said he understands disruption in the marketplace will likely occur and that the Uintah Basin has a volatile economy with a boom or bust cycle. “[That’s] mainly because the priority out there is energy and they have not broadened the base economically,” said Herbert, “and so the question would be asked, is tax policy going to add to the volatility out there? Is it going to be volatile anyway? Is what we are doing here really going to impact the Basin?” Herbert’s answer was that he did not know, though he felt it worth noting that the volatility in the oil and gas industry is largely controlled by energy factors more than anything else. His take home point was that while he understands there is disruptions, he says the only fair way to handle tax reform is to start with everybody on the table and everyone contributing their fair share. What that ends up being, he said, will be determined and modified over time.
