The IACI’s dream of repealing Idaho’s personal property tax might come true.

SUN VALLEY — Gov. Butch Otter acknowledged that his position has shifted since the 2012 legislative session, when he approved a cut in the income tax rate instead of the Idaho Association of Commerce and Industry’s top priority.

Cutting income taxes had to come first, Otter argued, because it covered a broader segment. “In order to help the economy, we needed to help the entire economy,” he said.

The next step, Otter said, is phasing out the $129 million personal property tax, which provides about 11 percent of property tax revenue statewide.

“I want you to know my commitment to the personal property tax and the reduction and eventual elimination of that is undaunted,” Otter said to applause at the group’s annual public policy conference.


House Majority Leader Mike Moyle said the time has come for repeal, and said a draft bill is already circulating for the 2013 Legislature.

“We’re on the verge of getting something done here that will be beneficial to everybody,” said Moyle, R-Star. “It’s something we need to get done and be done with it. The stars are aligned now.”

IACI has pressed for years to repeal the tax on equipment and other nonreal property, which is considered an administrative nightmare by many businesses.

Senate Majority Leader Bart Davis, however, said the state budget is unlikely to be robust enough to replace $129 million in lost income to local governments.

Though the average proportion is 11 percent, four of Idaho’s 44 counties receive more than 25 percent of their property tax revenue from the personal tax. It supports all levels of local government reliant on property taxes, most of which are collected on assessments of land and structures.

“I couldn’t agree more that that’s a priority,” said Davis, R-Idaho Falls. “But if the solution today is that the state of Idaho will provide an economic reimburse-ment to the counties. … I don’t know how we have the dollars to do that.”