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Senate passes business personal property tax reduction

Senate passes business personal property tax reduction

Idaho Freedom Foundation staff
March 27, 2013
[post_thumbnail]Sen. Jeff Siddoway debates in favor of personal property tax legislation.

The Idaho Senate Tuesday approved legislation to reduce the state’s controversial personal business property tax. The vote was unanimous. House Bill 315, already approved by the House, will allow an exemption from the tax for businesses in the state on the first $100,000 worth of purchases of personal business property, and businesses would also be exempt from paying the tax on new purchases of items costing less than $3,000.

“You have to really believe that our tax policy impacts our economy and our job creation,” said Sen. Jeff Siddoway, R-Terreton, as he presented the bill before the Senate. “I am a true believer.”

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, taxable personal property consists of “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.”

In his annual State of the State Jan. 7, Gov. Butch Otter called for the elimination of the personal property tax, noting that “nearly everyone agrees that it is unfair drag on our economy.” While telling legislators that “whether the tax is eliminated all at once or phased out over a few years is less important to me than an exit strategy that considers our counties’ financial stability.” Otter recommended that elected officials in cities and counties be given the option of raising additional taxes in their local areas to fund essential government services.

Originally, legislation was introduced to a House committee in conjunction with Otter’s recommendation that would have completely eliminated the tax. “This is not just a starting point, this finishes this tax off once and for all,” testified Alex La Beau, president of the Idaho Association of Commerce and Industry, before a House committee on March 12 arguing in favor of what was then known as House Bill 276. LaBeau’s bill would have saved business owners an estimated $120 million a year. It did not survive, and then came House Bill 315.

County and local government officials protested La Beau’s plan, noting that the services provided by county and local government agencies are heavily funded with the personal business property tax.

Thus, Seth Grigg, policy analyst for the Idaho Association of Counties, introduced a modified bill, House Bill 315, that would reduce the tax burden to business owners by only $20 million a year in an effort to keep tax revenues flowing into county and municipal coffers.

The legislation now heads to the governor’s office for his consideration

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