Sean Ellis reports: An expected push to repeal the state’s personal property tax this year has some farm leaders alarmed because of concern about how it could affect agriculture.
“It’s a possibility and we should take it seriously,” said Sen. Bert Brackett, a Republican rancher from Rogerson. “It’s been talked about a lot.”
Agriculture equipment in Idaho is exempt from the personal property tax, which applies to business machinery, tools, furnishings, equipment and some fixtures and brought in $141 million for local governments in 2012, according to the Idaho State Tax Commission.
The tax accounts for a larger share of revenue in rural areas than in the state’s larger urban areas and ag leaders are concerned that eliminating it could result in the tax burden shifting to agriculture.
Idaho Grain Producers Association Executive Director Travis Jones said the state’s ag community will pay close attention to the debate on personal property tax repeal during the 2013 legislative session.
“Idaho farmers have a lot of money wrapped up in personal property and they want to know if there will be an impact on producers in any way, shape or form,” he said.
The repeal effort is being led by the Idaho Association of Commerce and Industry, one of the states most powerful lobby groups.
Gov. Butch Otter tackled the issue in his annual state of the state address. He called the tax something “nearly everyone agrees is an unfair drag on our economy” and said he believes there is consensus that accomplishing repeal should be a priority for the legislative session.
But Otter also noted how important the revenue generated by the tax is to local governments and said a plan has to be in place that “considers our counties’ financial stability.” He offered the possibility of granting counties local-option taxing authority.
Idaho farmers are concerned that an increase in local tax rates would result in increased taxes for agriculture. Some rural counties, such as Oneida and Power, are heavily reliant on the personal property tax — both get about 40 percent of their total revenue from it — and they’re also heavily agricultural.
“If they repeal the personal property tax, counties such as Power, which I represent, will lose a considerable amount of tax revenue,” said Sen. Jim Guthrie, a Republican cattle rancher from McCammon. “If they lose that, they will either look to the state or shift the tax to somebody else, which could include agriculture….”
Otter’s proposed fiscal 2014 budget sets aside $20 million for easing counties’ transition should the tax be repealed. But that still leaves a sizable hole that will have to come from somewhere and farmers worry they’ll be a target.
“That’s a big concern we have,” said Dar Olberding, a lobbyist for the wheat industry.