BOISE – The Idaho House voted 67-2 on Tuesday to eliminate the personal property tax on equipment for about 90 percent of Idaho businesses, favoring a plan by counties instead of a broader industry proposal that lawmakers decided was too expensive.
The proposal exempts businesses’ first $100,000 worth of computers, tables, chairs, machinery and other personal property in each county from taxation. New purchases up to $3,000 would be exempt from future taxes, and the bill would also streamline the process by requiring reports once every five years instead of annually. The state would cover the $20 million annual loss to local governments and schools, though the amount wouldn’t grow as costs grow in the future.
That was the sticking point for the two opponents, Reps. Shirley Ringo, D-Moscow, and John Gannon, D-Boise.
“The voters have repeatedly said in the last five elections that they want the public schools supported,” Gannon told the House, noting that just last week Idaho voters approved more than $107 million in property tax overrides for school districts around the state. “Yet we seem to be going in the opposite direction in this body,” he said, “because we’re reducing general fund revenue by $20 million, making it that much more difficult to adequately fund our public schools.”
Ringo noted that in 2006, Idaho cut property taxes for schools and promised to make up the difference with an increased sales tax. “I think we haven’t done a very good job of the protecting schools part,” Ringo said. She noted that last year Idaho also gave top individual and corporate earners $35 million a year in permanent income tax cuts.
House Majority Leader Mike Moyle, of Star, said the move prepares Idaho for eventually eliminating the entire $141 million personal property tax, something many Republicans believe will stimulate Idaho’s economy and attract investment.
“Down the line I would like to get rid of the whole tax,” said Moyle, a Republican. “But I think this moves the ball in the right direction.”
Democrats said the bill would get rid of a record-keeping headache for most small- and medium-size businesses.
“It’s a decrease in the hassle factor, and that’s why I’m supporting it,” said House Minority Leader John Rusche, D-Lewiston.
The measure was crafted by the Idaho Association of Counties, which for days has been competing for the favor of lawmakers against a more expansive alternative floated by the Idaho Association of Commerce and Industry. That plan would have reduced the tax by $120 million a year by 2020.
The bill would eliminate the tax on business equipment for all but about 6,000 of the roughly 53,000 businesses that now pay it.