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Business tax perks bill passes Senate committee … but not without controversy

Business tax perks bill passes Senate committee … but not without controversy

Idaho Freedom Foundation staff
March 12, 2014
[post_thumbnail] Sen. Cliff Bayer, R-Boise, voted against a tax perks bill that critics said has not been adequately thought through.

After a lengthy and impassioned debate, the Senate Local Government and Taxation Committee by voice vote approved a measure intended to provide tax credit perks to certain businesses under defined circumstances as a means of incentivizing companies to expand their employment base.

House Bill 546 now will face a full vote in the Senate.

Discussion among the committee members quickly turned to a point within the legislation that some have found to be controversial. Under the plan, the decisions about which companies would receive the tax perks would all be made by the Idaho Economic Advisory Council, a board of seven individuals appointed by the governor.

“One of the concerns that I’ve voiced to you is where are we headed with this,” said Sen. Elliot Werk, D-Boise, to Jeff Sayer, director of the Idaho Department of Commerce. “There are people out there talking about cronyism and board members making decisions that can’t be repealed. Would you address this?”

“The commerce department won’t be the only player at the table,” Sayer replied. “The community will be as well. The council will be there to approve or reject plans, but not to formulate the details of them.”

“What about the person who disagreed with the person you picked for the incentive program?” asked Sen. Steve Vick, R-Dalton Gardens. “What recourse would that person have?”

Sayer said that the decisions of the council will be “final,” to which Vick asked “are you comfortable with that?”

“Yes,” Sayer responded,” because the process of qualifying for this will already have been very extensive.”

Wayne Hoffman, president of the Idaho Freedom Foundation, testified against the bill. Noting research from the nonprofit Tax Foundation that gives Idaho some low rankings on tax policy, Hoffman told the committee that “we hear a lot about government picking winners and losers, and how bad that is. This bill does exactly that.”

Christopher Guil of Blue Sun Energy, a Colorado-based biodiesel company, testified in favor of the bill. “My company is expanding and is considering Idaho as a place to do that. This bill is exactly the type of policy that can be persuasive with my board of directors.”

John Runft, a Boise attorney who spoke on behalf of the Idaho grassroots group Tax Accountability Committee (TAC), said that he had identified what he called the “dagger in the heart” of the legislation. “This is the executive branch’s dream come true, and TAC activists around the state are very upset by this,” he told the committee. “This will allow the executive branch to make decisions with private organizations with no input from the legislative branch and absolutely no oversight from the judicial branch. This is a huge and fundamental flaw and it should be rejected.”

On this point, Sen. Cliff Bayer, R-Boise, noted that the bill would “place tax code outside of the Legislature,” and asked Sayer “is this novel, in your view?”

Sayer responded that “I am not a constitutional scholar, but this is like other incentive programs that we have.”

George Gersema of the Idaho Business Alliance told the committee that “our membership consists of small business owners. None of these existing small businesses who have built this state will benefit from this plan.” He added that “the unemployment insurance burden in Idaho is the second worst in the United States. How about if we address that to make our state more competitive?”

Mike Ferguson of the Idaho Center for Fiscal Policy told the committee that “there is essentially no fiscal analysis on this bill. We’ve never seen anything like this before.”

Noting that he was neither for nor against the bill, Ferguson said that “Mr. Sayer originally said that there would be no fiscal impact of this bill, but then was forced to admit that the cost would be minus $3 million. Then, I would note, after a House committee hearing it was determined that the fiscal impact would be plus $7 seven million. I submit to you that this kind of analysis is wholly inadequate.”

Bayer and Sen. Dan Johnson, R-Lewiston, were both recorded as “no’s” among the committee voice vote.

Note: IdahoReporter.com is published by the Idaho Freedom Foundation.

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