Wednesday, June 20, 2012

No taxes, no services? Yes

Cafes sometimes used to post a sign that said, "No shirt, no shoes, no service."

If Gov. Butch Otter has his way, Idaho counties may have to post a version that says, "No taxes, no services, no kidding."

Otter promised the Idaho Association of Commerce and Industry last week that he will make phasing out and abolishing the personal property tax a top priority in next winter's legislative session.

Counties levy the personal property tax on business equipment. It's hard to calculate and frustrates businesses.

But here's the problem. The tax produces $129 million in revenue annually for counties and Otter put forth no way to replace it. It accounts for 11 percent of counties' revenue on average, and in four counties it's 25 percent of revenue.

Senate Majority Leader Bart Davis said the state isn't bringing in enough to replace the money counties would lose. His hollow suggestion was to remove the cap on taxes that counties may levy on the growth in property values. The suggestion is laughable in an economy in which counties have seen huge losses and only anemic increases in property values.

Some in IACI suggested that the state might not have to make the counties whole because "nobody would notice."

If Idaho's penny-pinched counties won't notice the loss, presumably because it's so small, then how can the money ever live up to IACI's promise that eliminating the tax would be the best thing Idaho could do to spur economic growth?

Gov. Otter and the GOP-controlled Legislature shouldn't bet that counties won't notice. What the state takes away, it must replace, or doom residents to disintegrating roads, services and schools.

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