Bill would prompt changes in Idaho taxes

The Idaho Revenue and Taxation Committee heard the first reading of legislation that would make major changes to the state’s tax system.

The bill calls for a decrease in income taxes for the highest income brackets, the exemption of grocery taxes as well as the grocery tax credit and a rise in gasoline taxes.

“If you separate these issues as different points of this proposal as individual items, they will not move forward,” said District 30 Rep. Jeff Thompson. “There are some things in this bill that people like and some things that people don’t. Usually when you’re trying to find a solution for an issue, for all the people of Idaho, that’s where we have to go.”

Thompson said the bill would pay for state transportation within the state, which has been a hot-button topic for lawmakers as the legislature winds down.

The bill would lower taxes for top income brackets from 7.4 percent to 6.7 percent, but all other brackets would remain at their current rate. Fuel tax would be increased by 7 cents per gallon. Lawmakers would do away with the states grocery tax and the up to $100 grocery tax credit for those who are eligible.

Thompson said it’s too early to tell whether this bill is beneficial for all parties, but personal finance advocates already oppose on what effect this bill would have on the middle to low class.

“It’s not beneficial to-low income families, especially low-income families that have children,” said Partners of Prosperity Executive Director Jessica Sotelo. “The people that will benefit from this are people in the top tax brackets, the 1 percent.”

Lawmakers say the grocery tax exemption would lower the state’s general fund by $34 million. In addition, Sotelo said Idahoans on the lowest end of the income spectrum would face a net loss. The gains of this swap would be concentrated among the highest earners in Idaho.

“Idaho’s annual pay is one of the lowest in the nation; we are ranked 49th,” said Sotelo. “One third of our residents work in low-wage jobs, meaning their annual income falls below the poverty level, even though more than one-fourth have at least a four-year college degree.”

Idaho has a multi-million dollar shortfall for transportation funding. The legislature hopes to allocate $84 million into transportation without dipping into the general fund.

The Revenue and Taxation Committee plans to meet Friday to discuss whether the bill would move forward to a vote.