The Idaho House voted 53 to 17 Monday to end Idaho’s taxes on grocery, raise the state’s gas tax by 7 cents and provide steep cuts to income tax rates.
House Democrats provided all the testimony against the package, which is the brainchild of House Majority Leader Mike Moyle, R-Star. House Speaker Scott Bedke, R-Oakley, is also a co-sponsor.
Rep. Elaine Smith, D-Pocatello, said Moyle’s bill would serve as a middle-class tax hike and keep young families out of the state.
“Today, you have a big choice,” Smith said. “If you want to help them, then vote on on 311.”
Rep. Ilana Rubel, D-Boise, warned of dire consequences down the road if legislators take money out of the general fund, which provides money for schools, welfare programs and corrections efforts.
“The day is going to come when we don’t have this money anymore,” Rubel said. “We are going to kick ourselves for doing this.”
House Minority Leader John Rusche, D-Lewiston, called the bill a tax hike hidden in a “shell game,” while Rep. Mark Nye, D-Pocatello, said the bill’s multi-subject provisions might violate the Idaho Constitution.
Only three Republicans defected on the vote. Reps. Gayle Batt of Wilder, Wendy Horman of Idaho Falls and Neil Anderson of Rexburg joined with Democrats to oppose the plan. No Democrats supported it.
Moyle said the bill, which lowers income tax rates, will draw more small businesses to Idaho, plus gives a break to small companies filing taxes under individual rates rather than corporate ones.
“They’re not going to sit on. They’re not going to hide it under their mattress,” Moyle said of small businesses who would see more money after cuts. “They’re going to spend it.”
His plan would drop income tax rates from 7.4 percent to 6.7 percent, a drop affecting the top four brackets of earners. It would also hike Idaho’s gas tax from 25 cents to 32 cents. That would generate $65 million each year for road and bridge repair.
Finally, Moyle’s proposal would end Idaho’s tax on groceries, along with the rebate checks Idahoans receive annually for the taxes they pay on food purchased at grocery stores.
Instead of holding Idahoans’ tax dollars for months on end, Moyle and other sponsors believe keeping the state’s 6 percent sales tax of grocery items will keep millions of dollars flowing through the economy.
“I think it would be a great benefit for the citizens of Idaho,” said House Revenue and Taxation Committee Chair Gary Collins, R-Nampa.
Several lawmakers suggested the plan would make Idaho more competitive with surrounding states, which have lower income tax rates than the Gem State.
“We compete in a tax arena with surrounding states,” said Rep. Janet Trujillo, R-Idaho Falls. “When people have more money in their pockets, they spend it.”
Rep. Marc Gibbs, R-Grace, said if the bill spurs economic growth, more money will flow to the general fund, allowing legislators to spend more on roads, schools and other programs.
“We think this bill has a good chance of stimulating the economy,” Gibbs said.
Moyle seconded that point. “Idaho is not going to have more more for schools if you don’t grow the economy,” he said. “This bill does that.”
The bill now heads to the Idaho Senate. The measure is widely seen as the “going home” bill, Capitol jargon for the final piece of legislation necessary to complete lawmakers’ work.
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