Objections to a tax cut from Idaho’s top spender couldn’t stop the Idaho Senate from sending the legislation to Gov. Butch Otter’s desk.
Otter will see the $1.5 million tax cut bill after the Senate approved the measure Wednesday evening.
The plan, sponsored by Sen Steve Vick, R-Dalton Gardens, would roll back a tax imposed on the customers of companies like Netflix, Spotify, Pandora, Hulu Plus and many others.
The tax hike never passed the Idaho Legislature, but instead was imposed after the Idaho State Tax Commission interpreted ambiguous language in a bill lawmakers passed in 2014. The commission decided to tax the services late last fall.
Vick said adding the tax was not the legislation’s intent.
“They had never been taxed before,” Vick said. “Somehow, in that process, we ended up with a new tax.”
Budget committee co-chair Sen. Dean Cameron, R-Rupert, led opposition to the bill, criticizing two pieces. First, Cameron said, the bill’s fiscal note might be inaccurate. Second, he complained the tax cut reduces how much he and other lawmakers can spend.
Cameron is the co-chair of the powerful Joint Finance-Appropriations Committee, which sets revenue targets and spending levels.
The Republican said some spending items, like schools, outweigh the need to straighten out the tax code.
“For me, I have other priorities,” he said. “Our kids deserve better. It’s about priorities.”
He said schools in his district are using substitutes to teach kids.
Sen. Grant Burgoyne, D-Boise, supported the bill, but said the fiscal note bothered him. Though Netflix said it’s collecting the tax, the tax commission doesn’t know if the state is actually receiving the funds.
Cameron was quickly rebuffed by Sen. Jim Rice, R-Caldwell, who said legislators should “never, ever, ever allow” the tax commission to raise taxes unilaterally.
“That’s critical policy,” Rice said. “That should never be left to an agency.”
Senate Local Government and Taxation Committee Chair Jeff Siddoway, R-Terreton, said he tried long and hard to get good fiscal numbers from the commission, but was unsuccessful.
“There were no numbers to be had,” he said.
Additionally, Siddoway said he failed in properly vetting the 2014 legislation, which he called “way, way, way too broad.”
“This mistake rolled to your desk today,” Siddoway said.
Sen. Cliff Bayer, R-Boise, said the repeal wasn’t a special handout to entertainment providers, but rather a fix for a legislative blunder.
“They (the tax commission) fill in some of the gaps,” Bayer said, explaining what happens when legislation isn’t adequately clear. “That’s how we got where we are today.”
Republican Shawn Keough of Sandpoint, along with Democrats Roy Lacey of Pocatello, Dan Schmidt of Moscow and Janie Ward-Engelking of Boise, joined Cameron to oppose the bill. It cleared the body on a 29 to 5 count.
The House previously approved the bill on a 50 to 19 tally.