Counties Present Plan To Partially Exempt Business Personal Property

Molly Messick / StateImpact Idaho

The Idaho Association of Counties' Seth Grigg presented a plan to partially exempt Idaho's tax on business personal property.

Two months to the day after the start of the 2013 legislative session, a bill to partially exempt business personal property from taxation has been introduced. A second personal property tax bill may be presented as soon as tomorrow.

The House Revenue and Taxation Committee unanimously voted to print a bill that would exempt the first $100,000 worth of taxable business personal property. That $100,000 exemption would not apply to operating property holders, like utilities and railroads, which are assessed by the Idaho State Tax Commission. The bill would also exempt all items with a purchase price of $1,500 or less, effective January 2013. 

Seth Grigg, a lobbyist for the Idaho Association of Counties, presented the bill on behalf of the Association of Idaho Cities, the Idaho School Board Association and the Idaho Association of School Administrators. He estimated the exemption would cost between $18 and $19 million in forgone tax revenue.

Grigg describes the bill as a compromise that balances the desires of some in the business community to exempt business personal property against the need of local government and local taxing districts to generate tax dollars from that property.

“I don’t disagree that a full repeal would provide a greater benefit to larger corporations that are more capital intense, but the reality, in our view, is that the state does not have the money to replace that,” Grigg said after the committee made its vote.

The attempt to scale back or eliminate Idaho’s business personal property tax has been one of the most anticipated efforts of the current legislative session. The state’s prominent business lobby, the Idaho Association of Commerce and Industry (IACI), has pushed for a repeal of the tax. But the approximately $140 million in revenue the tax generates each year funds local government and services.

A StateImpact analysis of Tax Commission data shows that more than half of Idaho businesses pay less than $100 each year in personal property tax, while a handful of large businesses in the state would avoid millions in annual personal property tax payments under a full repeal.

IACI is expected to present an alternative proposal for a phased-in repeal of the tax tomorrow.