Rep. Shirley Ringo and former gubernatorial nominee Robert Huntley are reviving a plan to cut the sales tax rate from 6 percent to 5 percent, while eliminating exemptions and expanding the tax to many services.
They say new revenue — an estimated $371 million on top of current collections of just over $1 billion — should be directed to restoring funding to education, Medicaid and other programs subject to deep cuts in the past three years.
“We need to support the human infrastructure to assure there will be more opportunity for the 99 percent, because the playing field has been slanted toward the 1 percent,” said Ringo, D-Moscow.
Their plan would retain the production exemption on sales of goods and equipment used by agriculture and other businesses and continue to exempt health care. But it would lift 21 exemptions and exceptions.
The biggest hit would be felt in service industries, from lawyers and accountants to hair-stylists and auto repairmen. Other transactions subject to tax would include real estate commissions, construction materials, electricity and other utilities, transportation, trade-ins, lottery tickets and commercial aircraft.
The idea met with immediate hostility from business groups and top Republican lawmakers.
“There seems to be a disease infecting a lot of people in our country, and it makes me sad that we are catching it here,” said Senate President Pro Tem Brent Hill, R-Rexburg, a retired accountant. “That is: It doesn’t matter how much burden we put on business, they can handle it.”
Said John Eaton of the Idaho Association of Realtors: “It would be one of our top priorities to make sure this does not happen in Idaho.”
Ringo introduced a nearly identical measure in the 2011 session, but House Bill 29 didn’t get a hearing. Huntley urged lowering the rate and ending exemptions when he ran for governor in 1998, a message similar to Democratic nominee Keith Allred’s platform in 2010.
Huntley, a Boise attorney and former Idaho Supreme Court justice, lost to Gov. Dirk Kempthorne by 39 percentage points; Allred fell 26 points shy of Gov. Butch Otter.
Huntley and Ringo now plan to use the initiative process to win the change, giving Idaho voters the power to reform the sales tax enacted in 1965 while Huntley was in the Legislature.
Ringo and Huntley filed a similar initiative in 2010 but dropped it. Now they say the Occupy movement boosts their chances. They estimate it will cost $100,000 to gather about 47,500 signatures to qualify for the November 2012 ballot.
They hope to rely on union members and others to help.
That effort may be complicated because the state’s largest union, the Idaho Education Association, is focused on three measures already qualified for the ballot — the repeal of Superintendent of Public Instruction Tom Luna’s school reforms.
“Our priority is the referendums,” said IEA President Penni Cyr.
Idaho Association of Commerce and Industry President Alex LaBeau said he takes the initiative effort seriously. “It’s a direct assault on the economy and business in Idaho,” he said. “It amounts to nothing more than double taxation.”
House Speaker Lawerence Denney, R-Midvale, predicted a formidable campaign against an initiative. “I suspect there would be considerable opposition.”
House Revenue & Taxation Chairman Dennis Lake, R-Blackfoot, said he doubts the measure will qualify for the ballot, citing recent history.
In 2006, the IEA’s initiative to raise the sales tax a penny and dedicate the revenue to schools failed 55 percent to 45 percent. Lake said voters are reluctant to make tax policy by initiative.
House Majority Leader Mike Moyle, R-Star, also predicted defeat. “I don’t think the people of Idaho want a tax increase, and this is dang near $400 million.”
Ringo, however, said the initiative will allow voters to weigh in on whether to permanently shrink the size of state government, a restructuring that Gov. Otter calls the “new normal.”
“We think it’s a good idea to give people a chance to say whether they agree that’s the direction they want to take Idaho,” Ringo said.
Dan Popkey: 377-6438
