A new tax bill in the Idaho Legislature would reduce personal income rates across the board by one-tenth of a percentage point and enforce sales tax collections for most online purchases.
The bill, which cobbles together two earlier proposals, passed the Revenue and Taxation committee on a 12-3 vote Monday and moved directly to the House floor for expedited action.
The bill, presented by Rep. Mike Moyle, R-Star, would deliver an estimatesd $11 million in new sales tax revenue from online purchases and give back $27 million in reduced revenue from the tax cut. Each of Idaho’s five income tax brackets, ranging from 1.6 percent to 7.4 percent, would see a reduction.
The tax cut part of the bill is an add-on to the original online sales tax bill. An earlier tax cut plan from Moyle passed the House but died in Senate committee last week.
Idaho currently requires sales tax to be paid for online purchases but leaves it to taxpayers to report those purchases and pay the tax. The bill now moving to the House would put the reporting and tracking burden on retailers who have some kind of business presence in Idaho, such as a store location, or even an advertising effort targeted at Idaho residensts.
Committee members who supported the tax cut objected to the sales tax component of the bill. Rep. Heather Scott, R-Blanchard, said it was confusing to combine the two initiatives, and Rep. Ron Nate, R-Rexburg, said the bill was “fraught with problems.” He said the new requirement on out-of-state sales tax was potentially “impossible to enforce.”
Moyle said the tax cut would not affect the state’s long-term effort to increase funding for education and would make the state more competitive others in the northwest.
Rep. Mark Nye, D-Pocatello, joined Nate in Scott in opposing the measure.