BOISE -- Lawmakers are gearing up for the start of the 2013 legislative session that starts Monday. That could bring changes to a certain tax in Idaho.
The Governor, many state lawmakers, and Alex LaBeau with the Idaho Association of Commerce and Industry have said they want to eliminate Idaho's Personal Property Tax.
I think, without question, it's going to be one of the major issues that the legislature will deal with, said LaBeau.
Businesses pay personal property tax on most things they own that are not land or buildings. That coule be everything from computers and furniture to rail cars. LaBeau says repealing the tax, likely over a few years, will help Idahoans do businesses here. He says it will also draw more business to the Gem State.
[We project] for every dollar that you decrease of this tax, you have about six dollars of increased income, as a result of additional investment in equipment and tools, as well as people, said LaBeau. And, it sends a signal to the rest of the country that Idaho is open for business.
However, the tax generates $140 million a year for Idaho cities, counties, fire districts, and more.
It varies for every entity, but if we look at counties, personal property tax makes up 8 percent of Ada County's property tax revenue. That number jumps to 21 percent in Elmore County. In Caribou County, that percentage is 43 percent. Therefore, it is a big chunk of revenue that counties say they rely on to provide services like public defense and jails.
Counties have defined responsibilities under state law, said Daniel Chadwick, with the Idaho Association of Counties. It's an issue for counties, because we don't get to say, 'No' in terms of what we do.
Chadwick agrees with LaBeau that personal property tax is a bad tax. But, he stresses that districts, counties, and cities need that money to come from the state, or for the state to lift responsibilities and costs from the counties to avoid driving up other taxes.
To just take $140 million out of the revenue stream without consideration of a replacement is really bad public policy, and does not serve the taxpayers well, said Chadwick.
LaBeau agrees that the affect on local governments needs to be considered, but also believes the economic benefit of increased business will outweigh small governments' loss of tax revenue.