Introduction Of IACI Personal Property Tax Bill Sets Stage For A Fight

Idaho Statesman

The Idaho Association of Commerce and Industry's Alex LaBeau introduced a bill to phase out Idaho's personal property tax over a seven-year period.

The House Revenue and Taxation Committee voted this morning to introduce a second personal property tax bill, this one supported by the Idaho Association of Commerce and Industry (IACI), which represents business interests in the state. In doing so, the committee has set itself up for big decisions about whether and how to address the increasingly controversial tax this session.

IACI’s bill would eliminate the tax on business personal property. That’s in contrast to a bill presented yesterday by the Idaho Association of Counties’ Seth Grigg. That bill would exempt the first $100,000 worth of business personal property. It would also exempt all items with a purchase price of $1,500 or less, effective January 2013. 

Idaho’s personal property tax generates $140 million annually for local units of government. The Idaho Association of Counties, the Association of Idaho Cities and groups representing local school officials have lined up against its full repeal. They point out the extent to which some taxing districts rely on personal property tax revenue, and say exempting business personal property could result in higher taxes for homeowners, farmers and ranchers, and small business owners.

The Idaho Association of Counties’ bill in effect would free nearly 90 percent of business owners from the paying the tax while retaining 80 percent of the revenue the tax brings in. That’s because most businesses in the state pay very little personal property tax each year — under $100 — while a handful of large businesses receive personal property tax bills that run into the millions.

IACI president Alex LaBeau yesterday dubbed the Idaho Association of Counties’ bill  “demagoguery of the highest order.”

“I think it’s really poor economic policy, and it’s playing class politics between small versus large and wealthy versus poor,” LaBeau said. “It sends a really bad message to any large investor: ‘Welcome to the State of Idaho. You have to pay a tax that nobody else has to pay.’ It’s not a real solution.”

The IACI bill would repeal Idaho’s tax on business personal property over a seven-year period. Under the plan, the state would reimburse local government and taxing districts for their forgone tax revenue.

With two very different personal property tax proposals before his committee, Revenue and Taxation Chairman Gary Collins outlined the next step. The committee will hold an informational hearing on both bills next Tuesday, but it will not vote that day.