Idaho’s most powerful business lobby, the Idaho Association of Commerce and Industry, proposed eliminating what it calls the “most hated tax” after state revenues grew by 8 percent over the biggest revenue year in history, to $3.14 billion.
IACI President Alex LaBeau told a rare joint meeting of the House and Senate tax committees Wednesday that eliminating the estimated $129 million tax on equipment and other non-real property would be the best thing lawmakers could do to spur economic growth.
Fiscal 2013 revenues are projected at just less than $2.7 billion.
IACI’s proposal would replace lost local property taxes with state dollars, just as K-12 maintenance and operation levies were replaced by state dollars by the Legislature in 2006.
“You refill all the coffers, you refill all the education coffers, you refill everything that’s out there,” LaBeau said. “It costs the state nothing today, but it gives assurances to business that at some point you’re going to get rid of that tax.”
The 2008 Legislature enacted a personal property tax repeal bill covering assessments up to $100,000. But a repeal was contingent on 5 percent budget growth, a figure that’s not been met since.
LaBeau has been fighting to keep personal property tax relief in the mix as lawmakers have leaned toward cutting individual and corporate income tax rates.
“It is not neutral. It is not transparent. It is difficult to administer. It is an unstable source. It lacks a consistent base. It is simply a bad tax,” LaBeau said.
House Revenue & Taxation Committee Chairman Dennis Lake, R-Blackfoot, noted the fresh idea but warned LaBeau, “It may be a long time down the road before we reach $3.14 billion.”
LaBeau answered that he was trying to offer another option to lawmakers.
IACI, which is dominated by large businesses, including Micron Technology Inc. and Idaho Power Co., got an unexpected boost during Wednesday’s joint hearing from Idaho Department of Commerce Director Jeff Sayer, who spoke to the committee on behalf of small- and medium-sized business.
Sayer told lawmakers that he’d surveyed small businesses in recent weeks.
“They said personal property tax is their biggest issue,” Sayer said.
