From the Indianapolis Business Journal:
The House and Senate approved bills Thursday to reduce the business property tax just hours after local government officials from across the state joined to protest the legislation.
Representatives from Indiana counties, police, fire chiefs, schools and local government officials said they are against the bills – which would partially eliminate the business personal property tax – because the proposals don’t directly provide additional revenue to supplement the funds that would be lost.
“I think we all see this as the most significant piece of revenue loss coming down the road that local governments have ever seen in the state of Indiana,” IATC President Matt Greller said.
Republican Gov. Mike Pence has proposed phasing out the tax, which is levied on business equipment and supplies, and generates about $1 billion for local governments each year. But he’s also endorsed the House and Senate bills, which reduce – but don’t eliminate – the tax.
Under House Bill 1001 – passed 63-33 Thursday – counties would have the authority to decide if new businesses have to pay the tax on new equipment they purchase.
“This is a jobs bill,” said the bill’s author, Rep. Eric Turner, R-Cicero. “This is a bill that would create economic growth in our state.”
Senate Bill 1 – approved 35-11 Thursday – would lower the corporate income tax rate from 6.5 percent to 4.9 percent and eliminate the personal property tax for businesses that own less than $25,000 in business equipment and office supplies.
“This bill will help attract investment, support wage growth and help our state’s marketing effort,” Sen. Brandt Hershman, R-Buck Creek,
Although neither of the bills moving in the General Assembly would hit local governments as hard as the governor’s plan, leaders in both chambers have said the proposals could eventually lead to complete phase-out of the tax.
That’s what led local officials to launch the “Replace Don’t Erase” initiative, which they announced Thursday.
Greller said the effort was actually born in Michigan, where lawmakers have also proposed phasing out the business personal property tax over 10 years. But, Greller said, the Michigan General Assembly has made provisions to fully replace the revenue that local governments could lose.
“Eliminating the personal property tax may be the right thing for the state of Indiana. OK, we understand that,” Greller said. “What is more important is that we replace that revenue at the local level.”
Pence has said he doesn’t want to harm local governments, and that phasing out the personal property tax would attract businesses to Indiana and spur growth at existing businesses. Eventually, he’s said, the growth from those additional businesses and the jobs they create would help replace lost revenue.
But, local government officials say lawmakers should think about more than just helping businesses.
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http://www.ibj.com/house-senate-ok-corporate-tax-plans-despite-protests/PARAMS/article/45924
