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Utah House passes bill changing tax treatment of out-of-state municipal bond interest after delaying effective date
Summary
The Utah House on June 20 passed House Bill 1006, which taxes interest from out-of-state municipal bonds for Utah taxpayers but contains a newly adopted amendment postponing the laweffective date to Jan. 1, 2003. Sponsors said the change will lower municipal borrowing costs; opponents warned of administrative burdens for mutual funds and individual investors.
The Utah House of Representatives passed House Bill 1006 on June 20, changing how Utah taxes interest earned on municipal bonds issued outside the state and referring the bill to the Senate for consideration. The bill was amended on the floor to move its effective date to Jan. 1, 2003, to give investors and portfolio managers time to adapt.
Representative Greg J. Curtis, the bill's sponsor, told colleagues the measure is intended to reduce Utah issuers' borrowing costs by removing an incentive for Utah investors to favor tax-exempt bonds from other states. "If our bonds are not at this distinct disadvantage in marketing, we will pay less of an interest rate," Curtis said, arguing the change would benefit municipalities and other local issuers by lowering interest costs.
Curtis described the policy as a…
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