From the Terre Haute Tribune Star:
Vigo County and Terre Haute officials say they need to learn more about two new proposals that provide alternatives to Gov. Mike Pence’s push to eliminate the business personal property tax.
House Speaker Brian Bosma, R-Indianapolis, last week announced rather than an outright elimination of the tax that provides $1 billion annually to local government and Indiana schools, the GOP caucus supports allowing each county to decide if the tax is dropped, but only for new business and manufacturing equipment.
The plan would also not allow existing businesses to move from county to county to obtain the tax cut.
On Jan. 9, Senate Bill 1 was filed, proposing to reduce the state’s corporate income tax rate to 4.9 percent by July 1, 2019, a measure that would put $132 million annually back into the private sector economy, according to a release from state Senate President Pro Tem David Long, R-Fort Wayne, and Sens. Brandt Hershman, R-Buck Creek and Luke Kenley, R-Noblesville.
It would exempt small businesses from personal property tax liability if a business has less than $25,000 of personal property in a county. That change is projected to exempt up to 71 percent of business property tax filers, according to the release.
The bill would also create an 11-member commission to study the impact of the business personal property tax on Indiana’s economic competitiveness.
Terre Haute Mayor Duke Bennett has spoken out against the elimination of the tax, as it would reduce city revenue by $4.5 million, plus more than $935,000 for the city’s sanitary district. Bennett said Friday he does not yet know details of the two bills.
“Anything that would transition us in and help us grow business, but not at the expense of local government, I can live with,” Bennett said.
The mayor said he is concerned the business tax would simply be shifted to personal income tax. Then the concern will be the income tax is not competitive with other states, the mayor said.
“They just lowered the income tax level at the state level and now they want us to raise it? It almost like the state is just pushing this onto the locals to have to deal with this,” the mayor said. “It is a viscous cycle. You just can’t do that.”
Vigo County could see a more than $3.2 million reduction in revenue with the elimination of the business personal property tax. Vigo County Auditor Tim Seprodi said permitting counties to remove the business personal property tax is akin to an existing incentive already available to counties — a tax abatement.
“Tax abatement does reduce taxes for a period of time, so there is already something in place” to help business, the auditor said.
Seprodi said if county officials decide to eliminate the tax, the revenue must be replaced or local government must reduce services and cut employees.
That, Seprodi said, means increasing income taxes at the county level. Under state law, only the Vigo County Council can implement and raise such taxes. Vigo County’s income tax rate is 1.25 percent, from a combined County Adjusted Gross Income Tax (0.75 percent) and County Economic Development Income Tax (0.05 percent).
The county can raise income taxes up to a maximum of 3.75 percent, but that would be higher than the current state income tax of 3.06 percent, the auditor said. Reducing or eliminating the business personal property tax needs more study, Seprodi said.
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http://www.tribstar.com/local/x1186923056/Officials-want-time-to-review-tax-plans
