Wednesday, February 2, 2011

Tax break pays off

Idaho's top-rung political echelon is "shocked" at this unexpected turn of events: One of the tax breaks created for business has actually paid off in totally unexpected ways.

A 6 percent sales tax rebate created in 2005 for alternative energy developers has created a boom in turbine wind power farms in the state. Instead of the modest forecast of $2.13 million in lost yearly sales taxes on energy, Idaho could pay $47 million in rebates over the next two years.

A chagrined Gov. Butch Otter and legislators of both parties face a dilemma.

The state faces a $185 million budget deficit that could be eased if the energy sales tax rebate is canceled or modified. However, ending the rebates would send energy developers scurrying to nearby states that have no sales tax.

The answer is easy: Keep the rebate for now. It's an invaluable economic development tool. That conclusion is supported by a Boise State University study to be released soon that concludes that long-term benefits will exceed the tax rebates.

The rebates are an excellent investment in pollution-free energy development, seeding new jobs and ancillary industries, attracting even more alternative energy developers to the state and benefiting consumers as well.

The public has clamored for clean energy. Now Idaho is in the midst of a bonanza of wind-farm growth.

To take away an incentive that is working would be lousy economics and a major step backward for Idaho in 21st-century industrial planning.

This is one tax break that makes economic sense and wasn't just a reward for special interests.

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