Budget writers in the Legislature, who are hunting for more money to balance the fiscal 2014 and 2015 state budgets, are considering ways to scale back tax relief for business investments.
At a public hearing on March 5 members of the Appropriations Committee heard testimony on dozens of ideas for squeezing money out of existing programs including some that provide tax relief to residents and businesses.
One proposal would drop all retail establishments from eligibility for personal property tax relief, the so-called BETR (Business Equipment Tax Reimbursement) and BETE (Business Equipment Tax Exemption) programs. Large retailers with over 100,000 square feet of retail space are already excluded. The proposal to remove all retailers would raise an estimated $4 million in FY2015.
Another proposal would remove professional services from BETR and BETE, which would raise an estimated $5.6 million in FY2015.
NFIB told committee members that these ideas would create inexplicable inconsistencies where nonprofit associations, financial institutions, and a wide variety of nonmanufacturing establishments would be eligible for personal property tax relief but not mom and pop stores or professional offices. Equipment investments in stores and offices can be fundamental to the ability to provide better service to customers and clients.
Other revenue-increasing ideas being considered by the Appropriations Committee include:
* Adjust tobacco tax for equalization with increased cigarette tax beginning June 1, 2014
* Increase the cigarette tax by $1.50 beginning June 1, 2014
* Apply the temporary increase in the sales tax from 5% to 5.5% to services currently subject to 5% starting June 1, 2014
* Eliminate the sales tax exemption on purchases made by hospitals
* Eliminate the sales tax exemption on purchases made by private colleges
* Increase in revenue resulting from a tax amnesty program
* Increased collection of Internet Sales Tax
* Reduce the cap on the credit for rehabilitation of historic properties
* Repeal of the "Super Research and Development Tax Credit"
One piece of good news is that budget writers dropped an earlier proposal to repeal the use of LIFO inventory valuation on state income tax returns. NFIB and other business groups, as well as accountants, pointed out numerous problems with the idea and its harmful effect on businesses.
More information is available on the Committee’s website.