- Associated Press - Tuesday, March 11, 2014

BOISE, Idaho (AP) - A tax-incentive plan aimed at luring businesses to expand in Idaho is headed to the Senate floor despite some opponents’ concerns that it could permit cronyism.

The bill would hand a 30 percent cut in corporate-income, sales and payroll taxes to businesses that create 50 new jobs in an urban area or 20 in a rural area. In order to qualify, the employers would be required to offer wages on par or more than the county average.

Department of Commerce Director Jeff Sayer told the Senate Local Government and Taxation Committee that the measure could be the deciding factor for employers mulling a new project in Idaho.

“If Idaho wants to be competitive, we need to take a hard look at the incentives we can put on the table,” he said. “We have an opportunity to embrace a trend that’s occurring across the nation where states have figured out how to design their incentives in a way that make them performance-based.”

A business would have to create the required jobs before it can get the tax cut, Sayer said. If the business drops below that number, it won’t be eligible for the incentive, he said.

Chris Guill said his company, Blue Sun Energy, was considering moving a biodiesel plant from Missouri to Idaho, and a tax incentive like the one Sayer proposed could be a big factor in the decision.

“We wouldn’t be competing with additional businesses here. We’d be bringing new jobs - high-paying jobs,” he said. “This sort of bill will put Idaho on the map as far as our decision-making process.”

But opponents to the measure challenged the idea of a seven-person board getting the final word on who receives the tax credit. The bill states the Economic Advisory Council will be allowed to reject or accept a business’s application - with no option to appeal the decision.

That’s a problem, said John Runft of the Tax Account Accountability Commission.

“Seven people make the decision that is not reviewable by the judicial branch,” he said. “The idea that you can have administrative agencies with no review at all making a decision with private parties is fundamentally flawed.”

Idaho Freedom Foundation director Wayne Hoffman called the measure “colossally bad tax policy” that would favor big business at the expense of Idaho’s smaller, local employers who don’t qualify for the incentive. Those employers would be stuck paying 30 percent more taxes than competitors simply because they can’t afford to hire more than a handful of staff, he said.

Hoffman said a better idea would be cutting taxes across the board, not just for a select few.

“I recommend you reject this legislation and do something meaningful that actually does improve economic conditions and gives every company a chance to play in the marketplace in a fair and equitable fashion,” he said.

Others argued the state doesn’t actually know what the incentive program will really cost, because there was no way to know whether incentives would create jobs or if expanding companies will just get a fiscal break on something they were already doing.

Sayer said the incentive will actually bring in money, with Idaho raking in 70 percent of taxes it wouldn’t have gotten otherwise.

Several lawmakers said they still harbored reservations about the bill, but the committee voted to send it forward anyway.

Senate President Pro Tem Brent Hill said he was leery of tax incentives, but he knows Idaho is vying with other states for businesses like the one Blue Sun Energy was considering bringing.

“There are incentives out there. There are other people who are going to buy Mr. Guill’s business if we don’t do something,” Hill said. “He may have a preference to come here because we’re so neat. But he’s a businessman, and he’s got to look at it.”

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