In the end, the changes the House insisted on in the Senate-amended version of HB 599, the bill to repeal the personal property tax on business equipment, actually limited the tax break legislation further, rather than expanding it. “I’m very, very surprised at the House’s approach,” said Senate Tax Chairman Brent Hill, R-Rexburg, “since I thought they were coming to expand the exemption. Now they limited it more, in what they’re asking for here.” The amount of the exemption did get increased, from $75,000 to $100,000. But by allowing for just one exemption per taxpayer per county – rather than one exemption for each business site, such as multiple grocery stores owned by a single company – less of a break will be given. Also, the economic “trigger” that the House wanted added to the bill means it may not take effect right away; the Senate wanted it to start in 2009. “We may have to wait two or three years before this kicks in,” Hill said.
The amended bill would have a $17.4 million fiscal impact to the state when it takes effect, all of which the state would pay to counties to make up for their lost property taxes on business equipment due to the new exemption. Local governments wouldn’t lose in the process, and the exemption on up to $100,000 in value of business equipment would free 88 percent of the state’s businesses from paying the tax entirely.
Alex LaBeau, president of IACI, said his group supports the compromise plan. “There’s some good in what they’ve done,” he said. “Looking at an exemption of that magnitude for those of our members that are small and medium-sized operations, that’s not an insignificant thing.” LaBeau also noted comments from conference committee members that they’d like to move eventually toward eliminating the personal property tax entirely, perhaps as part of an overhaul of how Idaho sets up its taxing system. “At the end of the day, this is an excellent process we go through here. … We have a tremendous amount of respect for that process,” he said. “I think we were successful in raising the visibility of a very important issue, which is the eventual elimination of a very bad tax.”