Farmers keep wary eye on personal property tax repeal
By SEAN ELLIS
BOISE -- Efforts to repeal Idaho's personal property tax have some farmers concerned it could potentially shift the burden to farmland in the form of higher real property tax rates.
"Any time you provide tax relief and you still need the same amount of revenue, you have the potential to shift the tax burden," said Sen. Jim Guthrie, a Republican rancher from McCammon who, like many farmers, is watching the debate carefully.
The Idaho House voted 67-2 March 19 in favor of a bill backed by the Idaho Association of Counties that would repeal the tax for about 90 percent of businesses in the state by exempting the first $100,000 worth of personal property and future purchases up to $3,000.
However, that bill would still leave the tax in place for almost 6,000 larger businesses and is competing with a bill by the Idaho Association of Commerce and Industry that would repeal the tax altogether.
IACI has been pushing for a full repeal of the tax for almost a decade and doesn't appear ready to give up its effort.
"It is a tax whose time has come to go away," IACI President Alex LaBeau told lawmakers recently. "We are going to put a stake in the heart of this tax once and for all."
Agricultural equipment in Idaho is exempt from the tax and farmers and ranchers say they're sympathetic to other businesses that have to deal with it, but they also don't want to see the burden shift to them.
"We do sympathize with businesses that have to deal with this burdensome tax," said Travis Jones, executive director of the Idaho Grain Producers Association, which is neutral on the issue. "It's really a matter of unintended consequences."
Rural counties like Power and Caribou in east Idaho get about 40 percent of their revenue from the tax and government officials from those areas told House lawmakers that repealing the tax could have a major impact on services or result in real property taxes increasing significantly.
"We've heard from a lot of growers in Power and Caribou counties that are concerned ... about the possible impacts of repealing it," Jones said.
IACI's bill, which would phase out the tax over six years, would result in a total revenue reduction of about $140 million for local governments and the counties' bill would have an impact of about $20 million. Both bills require the state to reimburse local governments for lost revenue but many government officials were skeptical that would happen.
"If the tax burden shifts to farmers, ranchers and other property owners ... their tax payments would almost double," said Soda Springs School District Superintendent Molly Stein.
LaBeau said full repeal would result in a major economic stimulus to the state, but some lawmakers weren't convinced that would happen for smaller rural communities.
"I'm wondering how the bill is going to improve the economies of those rural communities. I'm not seeing that path," said Rep. Mat Erpelding, D-Boise.