The Herald Bulletin

Morning Update

Local Business

November 19, 2013

GOP leaders may push to repeal business’ personal property tax

INDIANAPOLIS — Some Republican fiscal leaders are promising to take a “cautious approach” on a proposal to eliminate a business tax that provides nearly a $1 billion in revenue to local governments and schools.

On Tuesday, during an organizational session in advance of the 2014 session in January, House Republicans said eliminating or reducing the business personal property tax would be one of their top legislative priorities.

House Speaker Brian Bosma called on his members to pass legislation that would create a “fair” business tax policy that would line Indiana up with other Midwest states that have eliminated the tax that businesses pay on machinery, computers, furniture and other equipment.

Bosma said the other top priorities are expanding early childhood education opportunities for low-income families, closing the “skills gap” for Indiana workers, and finding more funding to repair the state’s crumbling infrastructure.

But that tax-elimination priority may be the hardest sell because of its potential to dramatically impact local governments and schools that use that tax revenue to pay their bills.

Bosma acknowledged that concern at a legislative preview on Monday, and his Senate counterpart repeated that Tuesday.

Senate President David Long said the state can’t afford to replace the nearly $1 billion in annual revenues that local governments would lose if the business personal property tax is eliminated.

“We should not be afraid to look at this, but we should absolutely go into this with the understanding that if we don’t do it right, it could have a negative impact, a serious negative impact on the revenues for local governments,” Long said. “We cannot be tone deaf to that and we must thoughtfully work through the issue to make sure that it’s done fairly and reasonably, if we do decide to do that.”

A study done last year for the Regional Chamber of Northeast Indiana on the impact of eliminating the tax found it could cause significant stress on local government budgets. The study found, for example, that eliminating the tax would cost Long’s hometown of Fort Wayne more than $9 million a year in tax revenues.

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