On a party line vote Friday morning, the House Revenue and Taxation Committee approved a plan to cut income taxes, raise funds for road repairs and repeal Idaho’s grocery tax.
The bill, sponsored by House Majority Leader Mike Moyle, would serve as a $15 million tax hike in 2016, but then would cut taxes significantly in following years.
How important is the bill to GOP leadership as the session winds down in Boise? So much that House Speaker Scott Bedke, R-Oakley, attended the hearing and testified in support of Moyle’s plan, a rare occurrence.
Moyle said his plan, a result of months of discussion and negotiation, achieves important goals for lawmakers in the 2015 session, including providing tax relief and funding cash for road repairs.
The bill, backed only by Republicans, would hike gas taxes from 25 cents to 32 cents per gallon, cut income taxes for some earners from 7.4 percent to 6.7 and would remove the tax on groceries.
It would also end the grocery tax rebate, which refunds Idahoans’ grocery taxes on a yearly basis when residents file income tax returns.
The majority leader said the bill would make Idaho competitive in the business arena because it cuts taxes for small companies that typically file individual tax returns, rather than business forms.
“Quite frankly, our income tax brackets are too high,” Moyle said. “They’re insane.”
The plan drew scorn from a number of left-leaning groups, including the Idaho Center for Fiscal Policy and the Idaho Public Employees Association.
Donna Yule, president of the IPEA, said her group only supports the tax-hiking portion of Moyle’s plan and no other parts.
“We need to do something bigger and bolder for transportation,” Yule told lawmakers. “We need to raise revenue.”
The Catholic Charities of Idaho also opposed the measure because it reduces general fund dollars.
Bob Neugebauer, publisher of Gem State Patriot, supported the plan, saying that while he doesn’t normally approve of tax hikes, he sees the Moyle plan as a necessary compromise.
He also counseled lawmakers to look to the state general fund for more road dollars as automobile efficiency creeps upward in years to come.
Wayne Hoffman, president of the Idaho Freedom Foundation, told lawmakers the plan would keep millions of dollars in the economy by repealing the grocery tax, instead of asking Idahoans to wait for months to apply for the annual rebate check.
He also backed the income tax drop. “Idaho has a policy that penalizes success,” Hoffman said. “For most Idahoans, this represents a tax decrease.”
Rep. Ron Nate, R-Rexburg, said while he pledged not to raise taxes before coming to Boise this year, the bill’s elements provide enough of a trade-off to give him comfort.
“That made it palatable for me,” Nate said. He also took exception with some committee Democrats who worried about reducing the flows to Idaho’s general fund, the tax account used to pay for schools, health care and prisons, among other programs.
“Another name for that is that it cuts people’s taxes,” Nate said. “It’s the taxpayers’ money to begin with.”
Rep. Robert Anderst, R-Nampa, said the plan isn’t perfect, but went far enough.
“It’s not a home run, but it does touch three bases,” he said.
The plan now heads to the House floor.
Note: The Idaho Freedom Foundation publishes IdahoReporter.com. Also, Nate is a member of the Idaho Freedom Foundation’s Board of Scholars.