Personal property tax: second bill unveiled


A second and much-anticipated personal property tax repeal bill was unveiled Friday.

And on Tuesday, the House Revenue and Taxation Committee will start sorting out the competing proposals to eliminate this unpopular tax on business equipment, supplies and machinery.

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Alex LaBeau, Idaho Association of Commerce and Industry

Revenue and Taxation introduced a $120 million repeal bill authored by the Idaho Association of Commerce and Industry, an influential lobbying group representing some of Idaho’s largest employers. The IACI bill would eliminate the tax over seven years, and fully reimburse schools and all local governments — for now, but not in the future.

Public schools have a $38.6 million stake in the repeal of the personal property tax, according to 2012 State Tax Commission estimates. Schools derive about 9 percent of their property tax collections from the personal property tax, although those percentages vary widely from district to district.

School officials have voiced two central concerns over the personal property tax repeal.

The first is the question of reimbursement.

The second is a more complicated question about a long-term tax shift — if the personal property tax is eliminated, and the burden moves to homes and other real estate. School groups believe that this tax shift would make it more difficult to convince voters to approve bond issues and supplemental levies in the future.

The IACI bill would reimburse existing personal property tax collections, IACI President Alex LaBeau told the committee. But future tax levies and taxing districts would not be reimbursed. “We have to have some certainty built in.”

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Rep. Lenore Hardy Barrett, R-Challis

The bill was introduced after a brief discussion, but not without some objections. Rep. Lenore Hardy Barrett, R-Challis, was one of two committee members who ultimately voted against its introduction. “Can you convince me that this is not a tax shift?” she asked.

LaBeau said the bill would shift costs from the personal property tax — a tax the state has chopped over the course of a century — to the state general fund. There would be no shift, or a minuscule shift, to real property.

Friday’s vote sets the stage for a hearing on two starkly different bills: IACI’s proposal, and House Bill 272.

Backed by cities, counties, the Idaho School Boards Association and the Idaho Association of School Administrators, HB 272 has the same short-term effect as the IACI bill; it would allow each business an exemption on $100,000 of personal property. But HB 272 stops there, and has a pricetag of $18 million to $19 million.

Revenue and Taxation will hold a hearing on both bills on Tuesday, but will not vote, said Chairman Gary Collins, R-Nampa.

More reading: Here’s a link to Thursday’s story on the introduction of HB 272, and our “Personal Property Tax 101” blog on the tax, and the stakes for schools.