The prospect of the state tax on personal property being eliminated in the 2013 Idaho legislative session is raising concern among local governments.
Senate President Pro Tem Brent Hill, R-Rexburg, predicts that the unpopular tax on businesses will be cut. It requires businesses to inventory, and pay tax, on furniture, computers and supplies as sundry as staplers.
But little has been proposed to replace the tax money lost to city and county governments, estimated at $133 million to $143 million statewide during a six-year phase out. Personal property accounts for 9 percent of property taxes statewide but varies widely, from 7 percent in Ada County to 45 percent in Caribou.
The 2008 Legislature approved a five-year phaseout of the tax without a single dissenting vote. But the yearly reduction was tied to state revenue growth of 4 percent or better, a threshold that has not been reached.
The law would exempt the first $100,000 of personal property, phased in over five years. That would have eliminated the tax for about 83 percent of businesses.
Its really scary what the Legislatures thinking of doing, says Latah Commission Chairwoman Jennifer Barrett. It could really upset our economy for our county.
She said county government could face reductions in employment, furloughs and budget cuts.
The city of Moscow receives 3.4 percent of its property tax revenue from personal property. That would mean an annual loss of $175,000 if the Legislature axes the tax, City Supervisor Gary Riedner said.
Riedner said that if municipalities were given the ability to enact local-option sales taxes, it could alleviate the potential losses. Such taxes must be approved by voters.
email@example.com. The Idaho Statesman contributed.
Disliked by business owners, the tax could be cut next year. That worries some local officials.