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Otter vetoes measure to eliminate tax break

BOISE – Idaho Gov. Butch Otter has vetoed the only measure to eliminate an existing tax break that lawmakers approved this year.

HB 664 sought to repeal a 5 percent tax credit for research activities by businesses. The bill was one of just two that passed after a legislative committee recommended a sweeping review of dozens of Idaho’s existing tax breaks to see if they’re still appropriate. The House tax committee refused to consider reviewing most of them.

House Tax Chairman Dennis Lake, R-Blackfoot, sponsored HB 664, saying companies do research for business reasons, not to get a tax break. But Otter said it was “inconsistent” to repeal the break at the same time that Idaho’s enacting new tax relief for businesses from the property tax on business equipment.

“To withdraw this small but important incentive while at the same time providing personal property tax relief to help stimulate business growth and investment sends a confusing and troubling signal to those with the confidence and entrepreneurial spirit to tie their wagon to Idaho’s star,” Otter wrote in his veto message.

Just three tax-break repeals cleared the House committee this year. One, for broadband investments, was pulled back by its sponsor before the full House could vote on it. The other passed, but it was for a never-used incentive that had been designed to benefit the Albertson’s grocery store chain.

Repealing the research credit would have gained the state $1.4 million a year in tax revenue.