Eliminating personal property tax takes center stage during economic conditions hearing

Eliminating personal property tax takes center stage during economic conditions hearing

by
Mitch Coffman
February 8, 2012
Mitch Coffman
February 8, 2012

A joint committee meeting of the House Revenue and Taxation Committee and the Senate Local Government and Taxation Committee heard testimony on Wednesday on what could be done to stimulate economic conditions in Idaho. Seven people testified, primarily representing the state’s largest business and agricultural interests.

Gov. Butch Otter has proposed a number of tax relief ideas with the intent of yielding $45 million in tax cuts.

While there were a number of ideas and suggestions given to the joint committee meeting on growing Idaho’s economy and providing some tax relief, the one overriding theme was Idaho’s personal property tax.

Personal property tax has become a lightning rod issue lately around the Capitol, with many prominent business representatives calling for an end to it. Brent Olmstead, lobbyist for the Food Producers of Idaho, believes this should be the case.

During testimony, Rep. John Rusche, D-Lewiston, questioned the need for the reduction or elimination of the tax that Olmstead suggested during his presentation. Olmstead replied, “In talking with processors and the food processing industry, they find that the business personal property tax to be more onerous, they would rather see that gone than any decrease in income tax. We’d be more than willing to pay a little more in one other area than to continue on with the business personal property tax.”

Alex LaBeau, president of the Idaho Association of Commerce and Industry, echoed Olmstead’s comments, spending the vast majority of his testimony on the positive outcomes from eliminating the personal property tax.

LaBeau has not been shy this legislative session in expressing his distaste for the tax, telling IdahoReporter.com in January that, “It’s not transparent, it’s not administered fairly, and it’s something that is problematic not only for local government, but problematic for business to keep track of.”

During his testimony, LaBeau hit on areas where Idaho has made progress in economic development and growth, including education, human resources and infrastructure (including GARVEE road-building bonding). However, when he came to Tax Policy on his powerpoint slide, there was a question mark, followed by a long pause from him.

Said LaBeau, “What have we done on tax policy (to help economic growth)?” LaBeau cited a study by the Tax Foundation, which in part reads “sales taxes and personal property taxes are associated with lower employment growth.” The report also says, “property taxes are a significant factor in business location decisions.” According to LaBeau, the foundation estimates that a 1 percent tax hike on personal property tax can reduce employment by as much as 2.44 percent.

LaBeau also cited a Business Summit, part of Idaho’s Project 60 economic development program, and recommendations given for economic growth in the Gem State. According to LaBeau, the first recommendation given by businesses was overwhelmingly to eliminate the personal property tax.

“This was not something that was contrived by lobbyists, this wasn’t contrived by our organization or any other organization,” he said. “We were as interested as everyone else to find out what businesses would say so we specifically did not talk to any of the folks that were going to be slated in front of that committee. We wanted to find out what they were going to say. This (the personal property tax) still comes up as the single most hated tax by businesses in this state, and it’s time to eliminate the tax and find a way to get it done.”

Besides the elimination of the property tax, the committees heard testimony in favor of rewarding companies for selling Idaho products, resurrecting funds for agricultural research and development, monetary incentives for job creation and a request that income tax rates be reduced.

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