Panel Considers Shifting Tax Burden Sales Tax Hike Could Cover Schools’ Portion Of Property Tax

Counting on Idahoans’ legendary dislike of property taxes, some legislators are pushing a proposal to substitute a 25 percent hike in sales taxes for the hated land assessments.

Voters may get a chance to make the choice themselves.

The House Revenue and Taxation Committee on Wednesday killed two local option taxing proposals but kept alive legislation to reduce school property taxes and shift the tax load to sales tax.

Final action was put off until Thursday, but it appeared the tax panel was ready to accept a recommendation from Rep. Jim Kempton, R-Albion, to put the measure up for amendment.

The amendment would provide for a statewide voter referendum before the change could go into effect.

That’s the process used by the Legislature when the sales tax was first authorized in 1965. It didn’t go into effect until voters approved it 156,109 to 99,048 in the 1966 election.

Rejected by the committee were bills sponsored by the Association of Idaho Cities calling for a local option sales tax authority up to 1 percent, and the Idaho Association of Counties bill for the same thing, but on a regional basis.

In each case, lawmakers representing rural areas argued people from outlying areas would wind up paying more sales tax at shopping areas, but would get no benefit from the higher tax.

The vote was 15-3 to kill the cities’ bill and 11-7 against the county proposal. Local government has been seeking local taxing authority from the Legislature for years, but lawmakers have been reluctant to give it.

“Do we really believe in local control?” asked Rep. Mark Stubbs, R-Twin Falls. “We talk about it … all the time but we don’t vote local control.”

Rep. Frank Bruneel, R-Lewiston, authored the tax shift bill. “There is a real demand for revenue for schools and government that is not property tax,” he said.

Bruneel said his bill would eliminate about $140 million in local taxes for school operations, replacing the funding by hiking the state sales tax from 5 percent to 6.25 percent.

Opponents argued it would wipe out the bulk of local property taxes for schools and inevitably shift more control over schools to the state.

Kempton said it would be a major change in state tax policy and something that important should be submitted to the voters.