The 2016 legislative session may prove to be a case of good, better, and best as far as tax relief goes.
But, who decides what’s best for Idahoans and business owners? That answer could prove lucrative for some -- and leave others wanting.
Key members of the House and Senate tax committees told IdahoReporter.com they will seek fairness in whatever changes come before their panels.
Senate Local Government and Taxation Committee member Sen. Cliff Bayer, R-Boise, said his desire for tax fairness comes in part due to the 2015 Legislature passing a $95 million gas tax and registration fee.
“Every Idaho household had to deal with a tax increase last year, so I think the Legislature would be remiss to give some Idahoans a tax cut this year and not others,” Bayer said.
The two-term Senate veteran again pledged support for repealing Idaho’s grocery tax, an idea that cleared the House in a package deal last year, but died in a tax-hike hungry Senate. In 2016 Bayer plans to continue his advocacy for repeal.
“It’s very timely considering the transportation funding and gas tax increase Idahoans were subjected to last year,” Bayer said.
Though he wouldn’t offer explicit details, Bayer confirmed that he and Senate colleagues have continued discussions about grocery tax repeal.
Two members of the House Revenue and Taxation Committee, Reps. Ron Nate, a Republican from Rexburg, and Heather Scott, a Republican from Blanchard, aligned themselves with Bayer’s principle of tax fairness across all income levels.
“I think one of the best things we could do is repeal the tax on groceries,” Nate said today. “It's a regressive tax, where it hits lower-income families more than the wealthy.”
Nate, like Bayer, signaled support for a plan that eases the total tax burden on all Idahoans. The Rexburg Republican views the gas tax and registration fee hike, approved last April, as unnecessary.
“It's unfortunate we took the step to raise taxes so drastically at 1 a.m. in the morning,” Nate said of the bill, which the Idaho House passed in the early hours of Saturday, April 12, to finish business for the year.
Nate said legislators had options at their disposal, including dedicating more surplus revenue to road repairs, to avoid hiking taxes.
Though he laments that legislators missed the chance to use surplus tax dollars to fund road work, Nate sees the silver lining. “It's a wonderful opportunity for us to take a serious look at tax relief,” he said.
Scott didn’t offer any details on the tax plan she’d like lawmakers to examine next year, but pledged to fight for fairness in whatever deal emerges -- if any.
"Whatever the Legislature decides to do, we need to develop a policy that is fair and equitable to all Idahoans, not just the well-connected and their special interests," Scott said.
Some plans leading in early discussions -- including grocery tax repeal -- would clear Scott’s bar. She noted, “We can’t let the elites help themselves while the little guy suffers again.”
Other ideas, like a total flattening of the state’s income tax brackets, would not clear Scott’s bar, at least at first blush. Such a plan would hike taxes on the lowest earners, including single people making up to $11,000 a year, while drastically cutting taxes for top earners.
Over the past six months, a legislative interim committee studied four proposals, including one to repeal the grocery tax and another to lower the income tax for top earners, from 7.4 to 7.3 percent. That panel, led by the House and Senate committee chairman, didn’t recommend any proposal ahead of the 2016 legislative session.
Lawmakers will get a better feel for options on Jan. 11 during Gov. Butch Otter’s annual State of the State address. During the 2015 session, the governor pushed for the minor reduction in the tax income rate, but that fell by the wayside during legislative business this year.
Otter hasn’t hinted about his plan, but he did tell the Associated Taxpayers of Idaho conference this month his administration may try in 2016 to “shave taxes” if the opportunity presents itself.
At that conference, ATI released an American Strategies poll, which found that repealing the grocery tax was the most popular tax reform proposal among respondents, with 69 percent of 603 registered voters supporting the idea.
Less popular were proposals to collect taxes on online sales, create a flat tax, and reduce the personal property tax.
Note: Rep. Ron Nate is a member of the Idaho Freedom Foundation’s Board of Scholars. The Foundation also publishes IdahoReporter.com.