Should Idaho’s business equipment tax be axed?

To some, it’s a much-needed source of revenue. To others, it’s an outdated business killer.

Now the state’s personal property tax — often referred to as the business equipment tax — is back in the spotlight as some renew calls for it to be abolished.

The tax is levied on all property owned by businesses from heavy machinery to run-of-the-mill office equipment. ($100,000 worth of equipment can be exempted under current state law).

But local business leaders say the tax makes Idaho unattractive to potential new businesses.

“It’s a tax that is very detrimental to economic development,” said Arlen Wittrock, who represents southeastern Idaho on the Idaho Economic Advisory Council.

Wittrock said he’s been working for the past 15 years to have the tax phased out.

Wednesday, Governor “Butch” Otter joined calls to abolish the tax.

“I’d like to see us get totally rid of the personal property tax,” Otter told the Associated Taxpayers of Idaho at a conference in Boise.

The governor didn’t specify when this might happen, but Wittrock remains hopeful.

“If you have $100 million worth of equipment and you pay a two percent tax rate, you’re paying basically a $2 million a year surcharge just for the privilege of being in the state,” said Wittrock.

But some worry cutting the equipment tax could hurt counties like Bannock, which rely on taxes paid from large companies.

“If they’re going to eliminate (the tax) altogether, the state will have make up the difference to the counties. The county cannot operate with no revenue,” said Bannock County Commissioner Steve Hadley.

Experts say the money could be made up when new businesses relocate to eastern Idaho — drawn partly by the absence of an equipment tax.

“With a growing economy we see more revenues coming into the state general fund,” said John Regetz, executive director of the Bannock Development Corporation.

But Wittrock said new businesses will be less likely to come to Idaho if the equipment tax remains on the books.

“If you were a business owner that had to buy and use expensive equipment, you’d be less likely to operate in Idaho because of this tax,” said Wittrock.

Both Wittrock and the Pocatello-Chubbuck Chamber of Commerce are proposing phasing the tax out over the next seven years.