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[r29] Column: Providing locals options on the business personal property tax
Start Date: 2/5/2014Start Time: 12:00 AM
End Date: 2/5/2014
Entry Description
Providing locals options on the business personal property tax

Last week was yet another busy week at the Statehouse. We worked long hours as we strove to meet legislative deadlines, considering 80 bills on Thursday alone. Our work paid off as we passed a number of bills that will have a significant impact on our state. One such bill is House Bill (HB) 1001, which would give local governments the option of exempting the business personal property tax (BPPT) on new investments. 

County governments and the media have honed in on this issue as the House has put forth our version of how to provide tax relief for Hoosiers, just as the Senate has put forth their proposal. The most important difference between the two ideas is that the House wants to give each county the option to decide whether or not eliminating the tax on new investments is the right move for the county, while the Senate mandates that the tax be exempted for filings less than $25,000. 

With HB 1001, if companies continue to use the equipment they own, the personal property tax would still need to be calculated and paid for. The exemption is intended to incentivize companies and small businesses that might be doing more with less to invest in the economy and upgrade their business equipment. The exemption also would not apply to companies that move their operations from one county to another.

Of our four neighboring states, only Kentucky still collects the tax but does so at a lower rate than Indiana. We have done an excellent job of positioning our state as one of the most business-friendly and pro-taxpayer states in the nation, but continuing to levy this tax puts us at a competitive disadvantage in comparison to others as businesses look to expand and relocate.

For many businesses, particularly small businesses, the administrative costs of filing for the tax outweigh the actual tax itself. Businesses also may not be able to expand and acquire the new equipment they need because of the added cost of the tax, creating a situation where businesses are making decisions on tax policy versus business needs.

But, all of these factors must be carefully weighed in each county as some localities rely more on BPPT revenues than others. By making this a local option, each County Option Income Tax Council can determine whether or not removing the tax would be a good economic development tool, especially the more rural areas of the state that can have a harder time attracting large employers. Yet, they currently don’t have that option and ability to bring in more business by getting rid of the tax on new investments – we want to give them that choice. 

For Hamilton County, we are the second-least reliant county in the state when it comes to this section of our tax base. The BPPT accounts for only 4.5 percent of the county’s tax revenue. If we exempted new personal property investments from the tax, it is estimated that our net personal property revenue would decrease by only 0.6 percent each year. I believe that counties should not be forced to make a decision like this, but rather have the option to do what is in their own best interest – which is why I supported the House’s version of the bill. 

I’m always interested in reducing the tax burden that Hoosiers and their businesses face, but not at the expense of sacrificing local services and our education system, which is why this isn’t a “one-size-fits-all” bill. If counties choose to exercise their tax exemption option, the positive benefits for our state’s economy will be great. We need to stay competitive with other Midwestern states to attract businesses as Noblesville and Hamilton County have successfully been doing for some time.

I have been listening to our county and local officials over the last several days as they shared their thoughts and concerns. I am committed to continuing to work together on this issue. As we move forward to the second half of the session, this bill will be a work in progress. I want to hear from more people in our community as I gather additional feedback, so the best solution can be passed to benefit every Hoosier community. 

Bills will be changing houses, so we will have new bills to discuss from the Senate and vice versa. I look forward to sharing our progress with you and as always encourage participation in the legislative process.

-30-

My column is also published in the Times in Noblesville.
Contact Information:
Name: Nicholas Goodwin
Phone: (317) 232-9831
Email: nicholas.goodwin@iga.in.gov
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