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House committee gathering testimony on personal property tax bill

House committee gathering testimony on personal property tax bill

Idaho Freedom Foundation staff
March 12, 2013
[post_thumbnail] IACI president Alex LaBeau testified in favor of eliminating personal property tax.

A committee of the Idaho House heard debate over a bill that would eliminate the state’s personal business property tax.

"This is not just a starting point, this finishes this tax off once and for all,” testified Alex LaBeau, president of the Idaho Association of Commerce and Industry, as he spoke before the House Revenue and Tax Committee, arguing in favor of House Bill 276.

Taxing “personal property” in Idaho is not new; the practice has been in place for more than a century. According to the Idaho State Tax Commission’s website, personal property that is taxable under the current personal business property tax includes “items used commercially, such as furniture, libraries, art, coin collections, machinery, tools, equipment, signs, unregistered vehicles, and watercraft.”

The website further states that “taxable personal property also includes items used commercially for convenience, decoration, service, or storage. Examples are store counters, display racks, desks, chairs, file cabinets, computers, typewriters, office machines, and medical/scientific instruments.”

HB 276, were it to become law, would gradually eliminate the personal business property tax over a seven-year period. La Beau told the committee that the tax is a huge disincentive for existing Idaho businesses to expand, and for out-of-state business to relocate to Idaho. Others have expressed concerns about disparities in the ways in which the tax is assessed.

“Because the tax is based, to some degree, on self-reporting, business owners will often value similar pieces of property at very different levels,” Dr. Stephanie Witt, professor of public policy and administration at Boise State University, told IdahoReporter.com last December. “This means that the state ends up with a lack of precision in the application of the tax.”

"It’s onerous on the payers and inefficient in the collection," Ray Stark, of the Boise Metro Chamber of Commerce, told the committee. Noting that at one point in Idaho’s history the state taxed personal kitchen and household items under the auspices of the personal business property tax, Stark added "if this tax suddenly reverted back to include your home items, the resulting tax revolt would be a firestorm."

But a representative for the state’s public employees group had a different take for the lawmakers.

"For the last few decades Idaho legislators have operated under the philosophy that cutting taxes will somehow cause great prosperity, even though the facts tell a very different story,” said Donna Yule, executive director of the Idaho Public Employees Association. “Idaho now has the largest percentage of minimum wage workers in the country, and yet this legislative body gave three tax cuts in the last 12 years that removed hundreds of millions of dollars from the state revenue stream. It seems that this would be a good time to start rethinking that philosophy."

Not all those who had signed up to testify before the committee were able to speak. Consequently, the committee has scheduled to hear more testimony Wednesday, and is not planning to make any decision to move the bill forward until Thursday of this week, at the earliest, according to a committee secretary.

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