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p>Idaho Governor James Risch has called an August 25th, 2006 special session of the legislature to consider the Property Tax Relief Act of 2006.
The act, RS16445, would eliminate the 3 mil education maintenance and operation levy on Idaho real property, which will immediately reduce property taxes $260 million. This amount would be replaced by raising the sales tax rate 20 percent from 5% to 6% generating approximately $210 million annually. The additional $50 million would be made up from the budget surplus. An advisory vote for citizen input would be placed on the November 2006 ballot.
Pro: All property owners would see immediate property tax relief. Because this tax cut applies equally to all landowners, struggling small business owners and family farms will receive the same benefit as homeowners.
Con: The sales tax increase will negate a large portion, if not all, of that relief for most families. This regressive tax will hit lower and middle income citizens the hardest and will decrease the competitiveness of business. The advisory vote is one month after the new taxes go into effect and has no provision to repeal the new taxes.
Democrat members of the legislature have proposed an alternative, RS16446 that would exempt homeowners (residential dwelling plus one acre) only from the 3 mil school tax levy. The proposal relies on spending $104 yearly from the state surplus. Businesses, commercial property, agriculture land and vacation home owners would continue to pay the rising costs of the M & O levy.
Pro: This act would immediately decrease homeowner’s property tax bills without increasing taxes. It returns a portion of the $203 million state surplus to the taxpayers.
Con: This is a temporary fix that does not deal with the inherent problems of the M&O tax levy or provide a source of education funding outside of the general fund. Agricultural landowners will continue to pay the skyrocketing property taxes forcing many off their lands. Overtaxed businesses and landlords that are not exempted will be forced to either shift costs to consumers and tenants or go out of business all together.
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