Senate President Pro Tem Brent Hill predicted Thursday that the 2013 Legislature will repeal the tax long targeted by business groups.
Hill advocates having the state replace revenue collected by local governments estimated at between $133 million and $143 million and phasing in repeal over six years.
It sends a message to businesses that are looking at locating here or are already here that we do have a commitment to eliminate personal property tax, said Hill, R-Rexburg.
Hill spoke to a session of the Boise Metro Chamber of Commerces Leadership Boise program.
In June, Gov. Butch Otter said he supports repeal, but he hasnt been specific about details. Personal property accounts for 9 percent of property tax statewide but varies widely, from 7 percent in Ada County to 45 percent in Caribou.
Hills proposal mirrors House Bill 599, which passed the House in 2008 but was amended after lawmakers got spooked by what turned out to be the leading edge of the Great Recession.
The revised measure exempted the first $100,000 of personal property, phased in over five years. That would have eliminated the tax for about 83 percent of businesses. But the law has never taken effect because it required 4 percent growth in state revenues over 2008 levels, a threshold not yet met.
A CPA and former chairman of the Senate tax committee, Hill said the tax is onerous, cumbersome and difficult to administer across 44 counties and 958 taxing districts. He advocates repeal for 100 percent of businesses.
Personal property tax is the worst kind of tax, Hill said. I think everybody wants to get rid of it. Its a matter now of who pays for it.
Also on the chamber panel was Alex LaBeau, president of the Idaho Association of Commerce and Industry.
LaBeau proposed a six-year phase-in and said the state shouldnt backfill lost local revenues. He argued that the allowed 3 percent annual property tax budget growth would accommodate local needs. Theyre still getting an increase over six years, theyre just taking less of an increase, he said.
Garden City Mayor John Evans, now president of the Association of Idaho Cities, said the tax is a brake on development associated with new equipment.
But Evans cautioned that reducing local services including police, parks and the arts could backfire. These are things that the HPs of the world expect and want to have to attract and maintain their employment base, he said. Do you want to live here and have your business here for reasons other than the pure economic impact of personal property tax?
Fourteen states have exempted personal property, but only Hawaii in the West.
LaBeau said he doubts that the Legislature will agree to full state reimbursement to local governments, as lawmakers did in 2006 when they raised sales taxes to pay for property tax relief in school districts.
Hill all but ruled out a tax increase, but warned that lawmakers might be reluctant to shift the burden from large businesses to residential, farm and small-business taxpayers.
Maybe we replenish a percentage, Hill said. Maybe thats where the compromise is.
Dan Popkey: 377-6438, Twitter: @IDS_politics