Spenser Heaps, Deseret News

SALT LAKE CITY — Republican lawmakers in the House and Senate will get their first look during their caucus meetings on Thursday at a tax reform plan that will include new taxes on services.

So far, behind-the-scene talks have brought agreement on what services are off the table, Sen. Lincoln Fillmore, R-South Jordan, said Wednesday, listing prescribed medical services, buying a house or paying rent, and tuition.

But other than those broad categories, Fillmore said, "everything is going to be on the table and it will be a question of how the negotiations work between the House and the Senate and the governor, and the stakeholders and the public."

Both Fillmore and Rep. Tim Quinn, R-Heber City, who’s leading the effort in the House, said the tax reform bill itself is still being put together, so Thursday’s caucus discussions will deal more with concepts than specifics.

Fillmore said he hopes a bill can be ready by the end of next week, so there’s enough time for "ironing out the wrinkles" before the end of the 45-day session on March 14.

"I know that whenever this bill lands, it’s going to create quite a stir. And I know it’s going to take time to let the stirring sort itself out so we get the right mix," the senator said.

Gov. Gary Herbert has said the sales tax base could be broadened enough that, along with a $225 million tax cut, the 4.85 percent state sales rate as of April 1 could be cut to 1.75 percent.

GOP leaders, however, have said that while they support coming up with new taxes on services to bolster the declining sales tax base, they’d rather see that tax cut made in the state’s 4.95 percent state income rate.

But a bill passed 21-2 by the Senate Wednesday, SB99, sponsored by Sen. Wayne Harper, R-Taylorsville, simply reduces the sales tax rate to 4.45 percent, a reduction of about $150 million.

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The bill now goes to the House, where, if representatives advance it to the House floor, it will be held until the final budget is put together because of the sizable financial impact.

Harper said the bill is intended to honor a committment made by lawmakers years ago to adjust the sales tax rate if Utah was able to begin collecting sales taxes on online purchases from out-of-state vendors.

Those collections on retailers that either didn’t have a presence in Utah or had agreed voluntarily to collect sales taxes started Jan. 1, following a U.S. Supreme Court ruling last year allowing states to go after the revenue.

"It has to be part of the discussion," Harper said of his bill. He said it puts the sales tax cut he is seeking "in the mix" as work continues on the larger tax reform plan also being referred to as tax modernization.

Senate Majority Leader Evan Vickers, R-Cedar City, agreed it’s part of the talks going on with the House and the governor’s office.

"You lay out all the tools," Vickers said. "It becomes a tool in that discussion."

Quinn said the bill could be viewed as a fallback should the tax reform effort fail.

"It would make some sense to me that if, and again, I’m not speaking for (Harper) it may be viewed as a backstop," Quinn said. "In case this doesn’t happen, he’s got that."

However, he said just slicing the sales tax rate is "counterproductive to the problems we have" with a shrinking base for the tax that makes up the bulk of the state’s general fund that pays for everything but education.

House Majority Leader Francis Gibson, R-Mapleton, said he’ll "just have to see how that bill fits into globally in what we’re trying to do. I think more immediately pressing for me would be to look a the income tax."

Gibson said because Utahns are paying more state income tax now because of the federal tax cut, he would prefer to find a way to "hold them more harmless in state income taxes."

Senate Minority Leader Karen Mayne, D-West Valley City, said it’s too soon to say whether Harper’s bill will end up being a backstop.

"This morning, I was with the governor and he had different views on how we should do that. That’s going to be the conversation in both chambers, how to balance it," Mayne said. "It’s going to be kind of a mumble jumble, a fix, a push and pull, but everything needs to be debated."

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