Eliminating the Idaho personal property tax is only one of the things on Governor Otter's 2013 to do list

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January 14, 2013


By Josh Altic

Boise, Idaho: Idaho Governor Butch Otter has already been busy in 2013. One of his first steps was to appoint Rich Jackson to be chairman of the Idaho State Tax Commission. Jackson became part of the commission in July of 2011 and Otter said, "He [Jackson] knows Idaho, and he knows Idaho’s tax policy, our history and our priorities. I look forward to seeing continued progress during his tenure as chairman."[1]

In a more controversial action, the governor proposed the elimination of Idaho's personal property tax. This tax applies to the movable property of businesses such as tools, office supplies and equipment. The Idaho Association for Commerce and Industry, which is in the same camp as the governor with respect to tax elimination, argues the tax adds unfair hardship to businesses. And according to attorney Richard Smith, speaking at a journalist panel concerning the repeal of personal property taxes, eliminating the tax would create a more business friendly environment in the state and encourage a growth of industry.[2]

But this tax does provide $140 million in revenue used by local governments to provide essential services to its residents. According to Idaho State Senate Brent Hill, this makes the repeal of the tax a very complex issue. But Otter has proposed to alleviate the loss of funding for counties and cities by advocating the use of local taxes to cover local needs. The governor, in support of the transition from a state personal property tax to local taxes, said "In fact, my preference is granting local-option taxing authority that enables county voters to decide for themselves how to address their most-pressing needs."[2][3] The key to granting the authority for local option taxes, according to Otter, is to remove the two thirds majority vote requirement for the approval of local taxes, making them much easier to pass.[4] The Freedom Foundation does not share Otter's view and was taken aback and dismayed at the governors state of the state speech in which he proposed these tax changes. The Idaho Freedom Foundation, Wayne Hoffman, had this to say with regard to the proposal: "That is loaded with all kinds of problems. Obviously, we're not terribly excited about that prospect at all."[3]

While proposing this tax elimination, Governor Otter did propose a budget calling for a 3.1% increase from the previous year. In his state of the state and budget address, he said, "That reflects slow but steady growth in our economy – an estimated 5.3-percent revenue increase for fiscal year 2014. It also reflects great uncertainty due to irresponsible federal leadership, and our continuing need for caution and prudence in the collection and expenditure of the people’s hard-earned dollars." Moreover, he called for an increase to school funding and set up a task force of teachers, administrators and other stakeholders, led by the State Board of Education, to look into ways of achieving progress on the education front.[5]

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