Tax break bill introduced

BOISE – Idaho businesses would get a phased-in tax break eventually worth nearly $100 million a year, under legislation introduced Friday.

“We believe that it has larger ramifications than just a tax break for business,” Alex LaBeau, executive director of the Idaho Association of Commerce and Industry, told lawmakers. “It is a move that makes Idaho more competitive on a global scale.”

The House Revenue and Taxation Committee voted unanimously to introduce the bill, but several members expressed concerns.

“It’s a big cost,” said Rep. George Sayler, D-Coeur d’Alene.

In the first year of the bill – which would be retroactive to Jan. 1, 2007 – up to $7 million in property taxes on business equipment would be eliminated. Other taxpayers in the same counties as the businesses would pay slightly more to make up the difference, including homeowners.

That first year’s exemption, LaBeau said, would be for up to $50,000 in equipment from each business. That would eliminate business equipment taxes for 84 percent of Idaho’s businesses, he said, with only the largest businesses still paying it.

Then, starting in the second year, the state would spend $12 million from its general fund to reimburse counties for an additional break to businesses on their equipment property tax. That would rise to $24 million the third year, $36 million the fourth year, and eventually $96 million in the year 2016 as all business property is exempted.

“It is a tax cut – never met a tax cut I didn’t like,” said an approving Rep. Lenore Barrett, R-Challis, who moved to introduce the bill.

Democrats on the committee, however, raised concerns. Rep. Nicole LeFavour, D-Boise, said, “This is a tax that will be shifted to the sales and the income tax for families. I’m very concerned about legislation like this.”

Rep. Dennis Lake, R-Blackfoot, the committee chairman, said he’ll schedule a public hearing on the bill sometime next week.

“I know that this idea has been floating around the entire session,” Lake told the committee. It’s the top legislative priority this year for the Association of Commerce and Industry, which long has been an influential business lobby in the Statehouse.

Lake is a co-sponsor of the bill, as is his Senate counterpart, Senate Tax Chairman Brent Hill, R-Rexburg. Also listed as co-sponsors are the co-chairpeople of the Legislature’s joint budget committee, Sen. Dean Cameron, R-Rupert, and Rep. Maxine Bell, R-Jerome; and two members of House GOP leadership, Reps. Mike Moyle, R-Star, and Ken Roberts, R-Donnelly.

Sayler, who is the assistant House minority leader, said the concept of providing a break for the first $50,000 worth of business property made sense to him, as “that would be a true benefit to small business.” But he said he’s “not enthusiastic” about going further than that.

Plus, the bill includes exceptions from the state repayments to counties for the future, larger tax cuts if state revenue falls short. “It could be left up to the locals to make it up,” Sayler said.

The association presented the committee with a study it commissioned that found that such a tax break for business would spur Idaho’s economy.

“The income gains to the population would far exceed the cost of the tax relief to the state,” wrote researcher Stephen J. Entin in the study.

He noted in his study that Idaho eliminated the tax on agricultural equipment several years ago and also reduced property tax rates on businesses and all property in August by about 20 percent as it shifted school operations funding from the local property tax to the state budget. That shift included raising the sales tax from 5 cents on the dollar to 6 cents.