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Idaho House passes measure providing tax credit perks to businesses

Idaho House passes measure providing tax credit perks to businesses

Idaho Freedom Foundation staff
March 5, 2014
[post_thumbnail] Rep. Robert Anderst, R-Nampa, believes that, like it or not, tax incentives need to be a part of state policy in attracting and expanding businesses in Idaho.

The Idaho House of Representatives has passed a measure intended to provide tax credit perks as a means of incentivizing businesses to expand their operations within the state. House Bill 546 passed by a margin of 63 to 5, and now goes to the Senate.

“This is an economic development tool brought to us by the Department of Commerce,” said Rep. Robert Anderst, R-Nampa. “Whether we like it or not, incentives have become a critical component to economic growth and this incentive plan is less risky than others.”

Known as the Tax Reimbursement Incentive program, the bill extends tax credits to certain businesses that expand their operations in ways that meet specific government criteria. Under the plan, the Idaho Economic Advisory Council would be given the authority to determine the location and the manner in which a business must expand in order to be eligible for the tax credits. Members of the council are appointed by the governor.

“The bill provides for transparency, with annual reviews so we can know if it is working,” Anderst said. “Perhaps most important, programs like this are working in other states. Utah, for example, reports approximately $2 billion in new and scheduled payroll because this tool incentivizes business to expand and to hire. Businesses have told us after they have considered Idaho and then passed us up that if this tool had been in place in our state they would have chosen us.”

Anderst added that existing businesses within the state would be eligible for the tax credit perks, as well as businesses moving in from outside of Idaho.

"House Bill 546 has good intentions, but this kind of thing is always bad tax policy," Rep. Steven Harris , R-Meridian, told IdahoReporter.com. "We should focus on tax policy that is flat, fair and broad. That will bring businesses in. Let’s knock off the special privileges."

“This bill has been worked on for a long time,” noted House Minority Leader John Rusche, D-Lewiston. “It started out as a value-added program for agricultural businesses and it has been improved upon over the years.”

Following passage of the bill, Harris elaborated on his opposition to it. "For some reason, we keep thinking the government can make better financial and hiring decisions then an employer can. Whenever the government instigates penalties or incentives on a business, it encourages them to make choices that are, by definition, less than optimal."

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