2008 Woodie Awards
Letter to the Editor: State Taxes
Issue date: 3/19/08 Section: Opinion
Idaho legislators say the state can't afford to phase out the sales tax on groceries but they are getting ready to pass a business tax cut that will ultimately cost $120 million a year in state revenue.
This means that millions more in taxes will be shifted to individual taxpayers.
This will be another step in a 30-year pattern of legislative policy: raising the taxes paid mostly by individual taxpayers, and using the added tax revenue to give tax cuts to business.
Idahoans were told that it was necessary to raise the sales tax to six cents in 2006 to provide property tax relief.
Some legislators acknowledged that there was another purpose for the sales tax increase: to eliminate the personal property tax on business equipment and machinery.
The big winners of the $120 million tax cut will be the major corporations and utilities that run the industry lobby, the Idaho Association of Commerce and Industry. IACI lobbied for the sales tax increase and is the primary sponsor of the bill to phase out the personal property tax.
Why is business property tax relief a higher priority than grocery tax relief? Consider that:
Over the last 10 years total residential taxes have risen 50 per cent faster than total property taxes and more than three times as fast as taxes paid on commercial and utility property.
Over the last five years, while total residential taxes rose $220 million, taxes on commercial property increased $4.7 million and taxes on utility property went down $15.9 million.
The $120 million tax cut is equal to one third of total commercial and utility property taxes for 2007, $360 million.
Idaho's original 3 percent sales tax was passed in 1965. This was followed by a significant tax cut for business, elimination of taxes on business inventory, timber products and livestock.
Additional business tax cuts in the 1980s reduced state revenue so much that the sales tax was raised to four cents in 1983 and five cents in 1986. Part of the revenue from the fifth cent was used for 1995 property tax relief that benefited commercial and utility property more than homes.
This means that millions more in taxes will be shifted to individual taxpayers.
This will be another step in a 30-year pattern of legislative policy: raising the taxes paid mostly by individual taxpayers, and using the added tax revenue to give tax cuts to business.
Idahoans were told that it was necessary to raise the sales tax to six cents in 2006 to provide property tax relief.
Some legislators acknowledged that there was another purpose for the sales tax increase: to eliminate the personal property tax on business equipment and machinery.
The big winners of the $120 million tax cut will be the major corporations and utilities that run the industry lobby, the Idaho Association of Commerce and Industry. IACI lobbied for the sales tax increase and is the primary sponsor of the bill to phase out the personal property tax.
Why is business property tax relief a higher priority than grocery tax relief? Consider that:
Over the last 10 years total residential taxes have risen 50 per cent faster than total property taxes and more than three times as fast as taxes paid on commercial and utility property.
Over the last five years, while total residential taxes rose $220 million, taxes on commercial property increased $4.7 million and taxes on utility property went down $15.9 million.
The $120 million tax cut is equal to one third of total commercial and utility property taxes for 2007, $360 million.
Idaho's original 3 percent sales tax was passed in 1965. This was followed by a significant tax cut for business, elimination of taxes on business inventory, timber products and livestock.
Additional business tax cuts in the 1980s reduced state revenue so much that the sales tax was raised to four cents in 1983 and five cents in 1986. Part of the revenue from the fifth cent was used for 1995 property tax relief that benefited commercial and utility property more than homes.
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