Personal property tax proposal moves ahead

POSTED: 08:14 MST Tuesday, March 4, 2008

by Brad Carlson

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Tags - Idaho Legislature, taxes

A proposal to eliminate the personal property tax on businesses will be printed into bill form, the House Revenue and Taxation Committee voted today. Idaho Association of Commerce & Industry President Alex LaBeau presented the proposal on behalf of 23 business organizations. The proposal would eliminate the local taxes that businesses pay on “personal” property such as machinery, equipment and tools. Idaho would pick up the tab over a five-year period starting in fiscal 2010, if state revenue growth is sufficient, LaBeau said.

A similar bill in 2007 passed the House, but died in the Senate – in part due to questions about compensating counties. Under the new proposal, a step-down of personal property tax on businesses would be triggered when Idaho General Fund revenues exceed those of the previous year by 4 percent, LaBeau said. Idaho’s existing budget stabilization and reserve accounts have a similar trigger mechanism, he said.

Most provisions of the proposal come from existing parts of Idaho Code, although the proposal contains some new or more thoroughly explained definitions to ensure that businesses of different types are treated the same, LaBeau said. For example, “fixtures” is not defined in Idaho Code, so the proposal writers used a definition from Colorado, he said. “Improvements” and “operating property” also are expanded upon in the proposal.

Personal property acquired after Jan. 1 of this year would be exempt from local property tax, LaBeau said. Personal property acquired previously would be assessed for this year, to establish a dollar figure that the Legislature can use next year.

A five-year cost range from $110 million to $120 million has been used for planning purposes, LaBeau has said.

Committee members asked about definitions, with some members noting those issues will be addressed when the full bill is considered.

“There is sure to be vigorous debate,” LaBeau said to committee members.

Rep. Nicole LeFavour, D-Boise, voted against the proposal. Sixteen percent of the taxpayers would receive 80 percent of the benefit. With no replacement tax on businesses, families will end up paying, she said.

LaBeau, noting that businesses also pay income and sales taxes, said IACI anticipates the Legislature to eliminate a couple of income tax exemptions.

After the hearing, LaBeau and Jayson Ronk, IACI vice president, said they haven’t heard concerns about the proposal’s timing in light of recently lower Idaho sales and income tax collections.

It’s an opportunity to reinvest in businesses, Ronk said.

“This is the perfect time to do economic stimulus,” LaBeau said.

Suzanne Budge, who leads the Idaho chapter of the National Federation of Independent Business, said business owners would reinvest the personal property tax money in their businesses. “It’s a great investment in existing businesses” as well as a relief to an administrative and compliance burden, she said.

7 Comments

It's about time. It's a stupid redundant tax that needs to go away. Miss LeFavour, the consumer ALWAYS pays the expenses of doing business, including taxes. I, as a consumer, know that I'm paying for all taxes, expenses, and golden parachutes where ever I shop. That's why the cost of things are climbing so dramatically with the price of fuel, and yes, fuel & highway taxes.
Comment By Jim A.
Tuesday, March 4, 2008 @ 2:04 PM

So it's ok to retain an unfair tax just because it keeps taxes down for others?
EVERY study on the regulatory burden and tax burdens faced by businesses are regressive, often steeply regressive.
The statistics are staggering. But we're making progress, especially in terms of regulatory flexibility initiatives (www.sba.gov/advo has more)
In an ideal world, we cut the taxes for those who create new economic rents; we raise taxes on those individuals who dissipate them. That's impractical, as industries/professions that are rent-seekers wouldn't take kindly to this.
But what we CAN do is eliminate double, even triple taxation - and regressive burdens in general.
Comment By Norris Krueger
Tuesday, March 4, 2008 @ 3:48 PM

Jim hits the nail on the head. My customers pay for the personal property taxes in my operating expenses. If sales tax is enacted on professional services the clients will get those passed on as well. If the personal taxe is repealed I will have a few more dollars to "invest" in the other expenses that are rising such as health care, software upgrades, etc. I have never understood why I need to pay taxes every year on a ten year old $50 chair. It is a blantant case of a tax that was put in place because the businesses were an easy target. Any tax ultimately gets back to the consumers pocketbook.
Comment By Patrick
Tuesday, March 4, 2008 @ 3:50 PM

I agree. we've been taxed and re-taxed
on the same items for years,, yet it is practically impossible to recoup the expense.
Comment By dave
Tuesday, March 4, 2008 @ 5:08 PM

Have you checked out www.endthetax.com? Cool site so you can contact your legislators and tell them what you think about the personal property tax.
Comment By Stuart Small
Tuesday, March 4, 2008 @ 7:53 PM

I am a small business owner in Texas and applaud what Idaho is trying to do. How much do you want to tax the people that supply 80% of this countries jobs?
Enough already
Comment By Jody Favia
Wednesday, March 5, 2008 @ 10:03 AM

The extra taxes we pay on our business equipment and fixtures amounts to almost 1 full employee each year. What would that job do for someone????
Maybe they would actually pay taxes. We pay income taxes and all the other taxes which all add to the cost of doing business.
Lets learn to live on less Govt. Spending, thus the need for less taxes.
Comment By Larry Wayment
Thursday, March 6, 2008 @ 9:32 AM

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