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Local-option tax to replace business tax not best idea now

Press-Tribune Editorial board
January 10, 2013
Idaho Press-Tribune

Anyone who promotes reducing and/or eliminating the personal property tax Idaho business owners pay on equipment should also be responsible enough to offer a concrete suggestion on how to fill the $141 million hole the repeal would create.

Give Gov. Butch Otter credit for offering an idea in his State of the State address Monday. However, his suggestion could put cities, counties and schools - as well as other agencies - behind the Eight Ball.

Those entities get a sizable chunk of their funding from this tax. Otter offered $20 million to help wean counties off their share of personal property tax money and suggested they recoup the rest by having the power to let voters enact local-option tax increases.

This passes the buck to cities and counties. They would get to be the bad guys who face the wrath of weary voters, asking them to raise their own taxes.

In Idaho? Good luck with that.

Yes, supplemental school levies have been successful here because schools are respected, but voters are far more skeptical of governmental entities. Let them tighten their belts, right?

Look what happened when Canyon County tried to pass bonds to build a new jail - supposedly a public safety issue. All three attempts failed miserably.

There's a good chance local option taxes would fail in many Idaho counties, which would leave them with two choices: further gut services that have already been trimmed to the bone, or, in some counties like Canyon, a possible increase in your property taxes. Pick your poison.

[Rural], sparsely populated counties would really be at a disadvantage, as they have so few potential sources of revenue to replace lost state funding.

You know the ideology our conservative lawmakers espouse - if you reduce taxes on businesses, they'll use the extra money to hire new people. New businesses will be lured here. All those new employees will be taxpayers, and the state will have plenty of new revenues to offset the money lost in the personal property tax repeal.

That sounds great in theory, but the risk it poses to local governments and schools if it doesn't pan out is too high. Would businesses really save enough money to hire new people? Would they save it for a rainy day (another recession)?

A full repeal of the personal property tax, replaced with a law allowing local-option taxes, is not a good idea now. Counties, cities, schools and property tax payers shouldn't have to bear the brunt of it.

Here's what the Legislature should do: start with a partial repeal, replaced with a mandatory tax on Internet sales. That would also level the playing field to Idaho's own brick-and-mortar businesses, which have to charge sales tax. It would bring in an estimated $35 million a year. Then, wait until the economy is strong enough and state revenues have increased enough to absorb the loss.

* Our view is based on the majority opinions of the Idaho Press-Tribune editorial board. Members of the board are Publisher Matt Davison, Managing Editor Vickie Holbrook, Opinion Editor Phil Bridges and community members Kim Keller, Carlos Soriano, Taylor Raney, Ken Pieksma and Nicole Gibbs.


Originally posted at http://www.idahopress.com/members/local-option-tax-to-replace-business-tax-not-best-idea/article_7a357220-5ac5-11e2-bb83-001a4bcf887a.html

The editorial posted here is provided by permission of its original publisher and does not necessarily reflect the views of Idaho Public Television.

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