Bringing the Economy Home

Session Wrap: Lawmakers Expand Tax Exemptions

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Until now, Idaho's 6 percent sales tax applied to free samples of beer, wine and other beverages.

Free samples of beer and wine are now tax-free.  So are parts for some airplanes that are worked on in Idaho.

Lawmakers expanded and added new tax exemptions during the 2012 session, adding to a growing list (exemptions start on page 41).

Lets start with the new.

Through House Bill 417, airplane parts installed into private, out-of-state planes are now tax exempt.  The measure sailed through both chambers of the Legislature mostly unopposed.  The stated goal of the bill is to give one particular company, Western Aircraft, a break.

“It is estimated annual sales tax receipts will be reduced by $164,082 by passage of this Act. Western Aircraft is the primary provider of services to non-resident customers and they make up the vast majority of these annual tax receipts. With passage of this Act, Western Aircraft, will add 12 full-time employees at an average annual salary of $54,538.” – HB 417 Statement of Purpose

Western Aircraft

Western Aircraft's main office building in Boise.

Western Aircraft president Jeff Mihalic says the company is on its way to hiring the dozen people it promised lawmakers.  Mihalic says the company’s five year plan is to create 100 new jobs.  He says the 6 percent sales tax exemption makes Western Aircraft more competitive with other states in the region.

“We’re optimistic about the additional business this will bring,” says Mihalic.  “Our market has been west of the Rockies – but with this legislation we are going after a bigger market, marketing as far east as Ohio, we’ve already had some success.”

The airplane-part exemption is effective now through June 30, 2016.

Lawmakers unanimously agreed to get rid of the tax on free beer and wine samples.  That’s right.  Those little sips of wine offered at tastings had a tax attached.  Capital Press reports the Idaho Tax Commission recently sent the Wine Commission a letter asking its members to pay the 6 percent use tax on all those samples.  Both commissions thought nixing the tax made sense.

“Besides wine and beer, it would also exempt products such as apple cider and grape juice given as free samples at farmers’ markets.

“This is great tax policy and it’s good for our business owners,” IWC Legislative Educator Roger Batt told members of the House Revenue and Taxation Committee, which unanimously supported the legislation Feb. 21.

Cinder winery owner Melanie Krause said the actual tracking of the free samples is the biggest cost for her business when it comes to the use tax.

“It’s the tracking that’s the nightmare, that’s a (big) cost,” she said.” – Capital Press

Lawmakers also voted to expand a tax deduction for energy efficiency upgrades.

“Sen. Curt McKenzie, R-Nampa, the bill’s Senate sponsor, said the expanded deduction could cost the state up to $1 million in general tax funds in the future, but that cost would be offset by increased energy savings and the economic boost those savings create.” – Eye On Boise

Over the next few weeks, we’ll be trying to gauge the total impact of Idaho’s tax credits and exemptions.  Stay with us and tell us what you’d like to know.


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