House approves tax break for businesses

BOISE – The Idaho House voted Friday to phase in a $100 million property tax break for businesses, sending the bill to the Senate.

The 47-20 vote passed HB 245a, legislation sponsored by the Idaho Association of Commerce & Industry to eliminate the personal property tax on business equipment over the next eight years. The bill starts this year by shifting just under $10 million in taxes to other property taxpayers, including homeowners.

Opponents said that would undo part of the benefit of last year’s first-ever increase in the homeowner’s exemption. “We will have given property tax relief, and then we will have taken it away,” said Rep. Margaret Henbest, D-Boise. Added Rep. Nicole LeFavour, D-Boise, “I think we really are going in the wrong direction here.”

But backers said the bill does away with an unfair and cumbersome tax on business equipment. “Yes, for this year, we do shift some taxes,” said House Tax Chairman Dennis Lake, R-Blackfoot. “I challenge anyone, anyone to justify personal property tax. I find no justification for it whatsoever.”

Rep. Scott Bedke, R-Oakley, told the House, “You need to ask yourself who is demanding the services. … Is it ag? Is it mining and timber? I don’t think so. It is residential.”

The personal property tax on agricultural equipment was eliminated in 2001. The state is reimbursing counties for those lost taxes, to avoid a tax shift to other property taxpayers. Rep. Ken Roberts, R-Donnelly, said it was only fair to follow up that tax break by eliminating the tax for all businesses.

HB 245a calls for a tax shift just in the first year, in which the first $50,000 worth of equipment at each business would be exempted from personal property tax. IACI estimated that that move alone would relieve 81 percent of Idaho businesses of all personal property taxes.

Then, in each subsequent year, the state would sends millions in payments to counties to make up the loss of increasing shares of personal property tax from larger businesses, if lawmakers approve such appropriations each year. Eventually, the state would be sending out nearly $100 million a year to replace the business taxes.

Meanwhile, two North Idaho legislators have introduced legislation to limit increases in taxable values for property taxes to 3 percent a year, in a bid to help homeowners cope with rapidly rising values. The bill, HB 264 by Sen. Shawn Keough, R-Sandpoint, and Rep. George Eskridge, R-Dover, was introduced in the House Revenue and Taxation Committee.

But Lake, the panel’s chairman, said it won’t get a hearing. Lake said he wants a “cooling off period” after last year’s property tax changes before making other major property tax reforms, though he supported the personal property tax elimination.