Business property tax break legislation derails in Senate committee
BOISE – A big property tax break for businesses that had been steaming through the state Legislature ran off track in a Senate committee Thursday.
The Senate Local Government and Taxation Committee voted 5-4 against passing House Bill 245, then voted 6-3 to put the bill up for amendment – while acknowledging that this late in the session, chances are slim it can be successfully reworked.
Sen. Joe Stegner, R-Lewiston, said he favors eliminating the personal property tax on business equipment – but not without first identifying a funding source for the move. “I think we need to have a verified funding source to pay for that,” he said.
Sen. David Langhorst, D-Boise, said, “The bill as written just doesn’t give me enough assurance that we’re not going to shift more of the bill onto homeowners.”
The measure, which earlier passed the House on a 47-20 vote, would have phased out the personal property tax that businesses pay on machinery and equipment. In the coming year, it would have exempted $50,000 worth of the property at every business from the tax, and shifted the nearly $10 million cost to other property owners. In subsequent years, state funds would have been used to reimburse counties as more and eventually all of the tax was phased out, depending on state appropriations.
Alex LaBeau, head of the Idaho Association of Commerce and Industry, which sponsored the bill, told the committee, “This is more than just another tax break for business.”
He said the tax break would spur the Idaho economy. He acknowledged that the first-year cost would be shifted onto other property-tax payers but said homeowners already are getting a break because lawmakers last year increased the homeowner’s exemption.
Roger Sherman, program director for United Vision for Idaho, told the panel, “We do not believe that expansion of the homeowner’s exemption created a need to shift property tax burden back onto homeowners from businesses.”
Former state Rep. Ken Robison, D-Boise, urged the committee to amend the bill. “The business share of state and local taxes has been declining. The share paid by individual taxpayers has increased dramatically,” Robison said.
“Since 1996, the share of total property taxes paid by residential property has increased from 55 to 64 percent, while the share paid by non-residential property has declined from 45 to 36 percent.”
Suzanne Budge Schaefer, lobbyist for the National Federation of Independent Business, told the panel that the tax on equipment is a “widely hated tax. … It’s not just big business that supports this,” she said.
AARP lobbyist Joe Gallegos testified against the bill, saying individual Idahoans, including seniors, would pick up the cost. “It will be particularly burdensome on your constituents who have low incomes or fixed incomes,” he said.