Idaho Senate passes $600 million income tax bill without grocery tax repeal amendment

The Idaho Senate passed the largest tax cut in state history on Tuesday by a vote of 27-7, along party lines. The $600 million package that reduces income and corporate tax rates and offers income tax rebates to most taxpayers now heads to the governor’s desk.

House Bill 436 was the first bill introduced this session, which began Jan. 10. The proposal was outlined in Gov. Brad Little’s State of the State address and draws from this year’s $1.9 billion surplus.

The package includes $350 million in one-time expenditure for the tax rebate, and $251 million on an annual basis beginning in 2023.

Before senators started to debate on the bill, Sen. Christy Zito, R-Hammett, motioned to send the bill to the amending order to add an amendment that would repeal the state’s grocery tax. Zito said she hears regularly from constituents that they want the tax repealed. That motion, which was called a hostile amendment by Sen. Jim Rice, R-Caldwell, was defeated by a vote of 8-26.

Sen. Chuck Winder, R-Boise, voted against the amendment and said people don’t realize getting rid of the grocery tax would result in a tax increase.

“What you’re hearing from the public is, they want to keep the tax credit and get rid of the sales tax,” Winder said. “If you get rid of the credit, people are going to get an increase in taxes. They just don’t understand it. The proper move is to increase the credit.”

Rice said a public policy survey from Boise State University showed Idahoans expressed a desire for property tax and income tax relief by nearly the same amount — 37.7% favored property tax, and 37.4% preferred income tax, while 19.6% said they wanted sales tax relief.

“This gives them the income tax relief,” Rice said. “There are other bills that will provide property tax relief that have already started working their way through, and some that are yet to be introduced. This does match up with what Idaho citizens think is important.”

Sen. Jim Guthrie, R-McCammon, said he had reservations about the tax cut and he would have rather seen the money spent on K-12 education in Idaho or infrastructure needs. He also wasn’t sure how much of Idaho’s surplus is related to federal stimulus dollars and that gave him concern, but he ultimately supported the bill.

“With great respect, I probably would not have spent that much money this way. That said, I recognize the state should not just sit on the money either,” Guthrie said.

Senate Democrats debated against the bill, saying the cut is so large that other forms of tax relief are unlikely to pass, such as property tax.

“Just ask yourself, if a $500 million property tax relief bill comes your way, can you vote for this bill and vote for that bill?” said Sen. Grant Burgoyne, D-Boise, during debate. “And that’s about what it will take to cut property taxes 25%.”

The bill includes an emergency clause that will make it retroactive to Jan. 1 if it is signed into law by Little, who has five days to sign the bill, veto it or allow it to become law without his signature. 

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