Report: Tax exemptions cost Idaho billions

It’s tax season and in Idaho, there are 136 exemptions on everything from prescriptions and funeral caskets to commemorative silver medallions. But some are asking if these tax breaks are breaking the state.

A new report by the Idaho Center for Fiscal Policy shows tax exemptions cost the state $2.4 billion in the 2014 fiscal year.

“Tax exemptions actually equate to tax expenditures,” said Kathleen Lewis, executive director of the Southeast Idaho Council of Governments.

Lewis said every dollar exempted is a dollar that doesn’t go to the state’s general fund.

“Our state budget is $2.8 billion so that’s — if you look at the difference, that’s quite a bit,” said Lewis, who also sits on the advisory board for the Idaho Center for Fiscal Policy.

After reviewing Idaho’s 136 tax exemptions, Pocatello-Chubbuck Chamber of Commerce President Matt Hunter concluded, “There’s probably some in here that should go away.”

But Hunter said not to the tune of $2.4 billion.

“The $2.4 billion that they think you could gain is very unrealistic,” said Hunter.

Hunter points to hospital bills — the state’s largest tax exemption — as an example.

Were they taxed, the state could earn an extra $466 million, but the costs could stack up for patients.

“Do you really want to have a $50,000 surgery and then have $6,000 in sales tax put on it?” said Hunter.

Gas is another item exempt from state sales tax, although drivers do pay a fuel tax and a federal tax. A sales tax on gas would net more than $171 million.

“But are you really gonna tax it again, over and above all the other taxes we already pay on gas?” said Hunter.

Lewis said she’s not saying any exemption should be scrapped, but she is suggesting lawmakers review all of the state’s tax exemptions every five years.

“We really do need to look at some of them or review all of them and make sure they’re still bringing the benefits in that they did before,” said Lewis.