BOISE (AP) • A policy expert with the Idaho Tax Commission says a repeal of the state’s personal property tax on business equipment would force residential and commercial property owners to make up for lost revenue dedicated to public schools.
Republican lawmakers are considering repealing the tax that businesses and companies pay on desks, chairs and heftier items such as transmission lines and factory machinery. Business leaders and lobbyists have been pushing the repeal for several years, calling the tax a drag on business development and economic growth.
Gov. C.L. “Butch” Otter supports getting rid of the tax, which generates about $141 million annually and is distributed to cities, counties and public schools.
On Tuesday, Alan Dornfest, the Tax Commission’s property tax policy supervisor, explained the consequences of doing so.
He said the result of repealing the tax is simple: an automatic tax shift to residential and commercial property owners to make up the more than $38 million a year that goes to schools from the tax on business equipment. With the exception of school districts in Lewiston and Boise, every district in the state would be affected by the shift.
Lawmakers have options to avoid putting a new burden on home and commercial property owners. Dornfest said the Legislature could appropriate general fund revenue to make up the difference for schools.
House and Senate leaders consider elimination of the property tax on business a priority for the 2013 Legislature.
Of the $141 million, cities get about $33 million and Idaho’s 44 counties’ share about $39 million. Counties have decried repeal, saying it would cut too deeply into budgets, especially for small counties that depend heavily on the tax to make ends meet. In Caribou County, the property tax accounts for more than 40 percent of the cash the county needs to fix roads, pay public defenders and pay indigent health care bills.
Otter has also said he would favor giving cities and counties local-option sales tax authority to offset the revenue loss from the business tax.