- Associated Press - Monday, February 24, 2014

BOISE, Idaho (AP) - The Senate’s tax committee chairman said Monday the only tax cut proposal his panel will likely consider this year is eliminating what remains of Idaho’s surcharge on business equipment.

Sen. Jeff Siddoway, a Republican from Terreton who heads the Senate Local Government and Taxation Committee, aims to expand last year’s $20 million business-equipment tax cut by completely phasing it out over the next decade.

Currently, only the first $100,000 of a business’s personal property - everything from its desks and computers to big semiconductor equipment - is exempt from taxation, according to the 2013 legislation.

Siddoway told The Associated Press that other tax-cutting proposals - including one from House Majority Leader Mike Moyle, R-Star, to trim Idaho’s income tax rates over the next six years - are tempting but require too significant a financial commitment in coming years as lawmakers simultaneously grapple with expensive proposals to bolster public education.

He’ll introduce his measure by next week, he said, after concluding internal discussions over how Idaho will replace more than $100 million local governments stand to lose once the personal property tax is fully repealed.

“I gave my word I would do everything I could to get rid of the personal property tax,” Siddoway said. “Beyond that, I’m not willing to look at any other tax reduction until we get the school funding problem fixed.”

By “school funding problem,” Siddoway means 20 recommendations of Gov. C.L. “Butch” Otter’s education tax force that could cost up to $350 million, including revamping the system that governs how Idaho’s public school teachers are paid as well as restoring $82 million in operations funding public schools have lost since the start of the recession in December 2007.

Otter wants to implement his task force’s recommendations over the next five years, and tax cuts could eat into funds to accomplish that, Siddoway said.

Moyle introduced his own tax cut plan in the House Revenue and Taxation on Monday.

According to his proposal, Idaho would begin cutting corporate and individual income tax rates by a percentage point annually over the next six years, for an eventual cost of about $125 million.

Once completed, it would leave Idaho’s top tax rate at 6.8 percent, lower than neighboring Montana’s 6.9 percent.

Moyle contends it would make the state more attractive to businesses looking to relocate or expand.

Moyle didn’t immediately return a phone call late Monday.

But Seth Grigg, lobbyist for the Idaho Association of Counties that spearheaded last year’s partial personal property tax repeal, said it remains to be seen whether Siddoway’s or Moyle’s plans survive the session - or if another emerges to replace them. “There are a lot of competing things out there,” Grigg said.

With just four weeks left in the 2014 session - the House and Senate are both aiming to wrap up business on March 21 - legislative leaders said proposals for tax relief will be vying for attention with education funding and Idaho’s rainy day savings accounts that were depleted in the recession.

Speaking to reporters Monday, Senate President Pro Tem Brent Hill, R-Rexburg, said the Legislature has succeeded in reducing Idaho’s income and personal property taxes by nearly $60 million since 2012, as well as expanding the grocery tax credit to $111 million annually.

“You add all those up, I think we’ve done a good job through this recessionary time cutting taxes,” Hill said, adding rainy day funds are growing again, too.

If there’s a glaring hole, Hill acknowledged, it’s public education - even with pending plans to boost teacher pay by 2 percent, or $23 million, and shore up recession-depleted operations funding.

“That still leaves us almost $50 million short of where we were six years ago in education,” Hill said. “You can see where we’ve been, where we are, and I think all of those things will come into play as we decide how to finish this year off as far as the budget is concerned.”

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