Kokomo Tribune; Kokomo, Indiana

Local News

November 19, 2013

GOP may begin push to repeal business tax

Taxes on personal property support many local governments.

INDIANAPOLIS — Republican legislative leaders may push Indiana to join the growing number of states eliminating the business personal property tax, but they admit that doing so may cost local governments and schools about $1 billion in annual revenue.

At a legislative preview luncheon Monday, both Senate President David Long of Fort Wayne and House Speaker Brian Bosma of Indianapolis said the tax is one of the few hindrances still in the way of making Indiana more attractive to job creators.

“It’s last piece of tax ‘fruit’ that you could deal with,” Long said, referring to the series of income, corporate and other tax breaks that the state Legislature has passed in recent years.

“It’s a priority to get it right,” he added. “Certainly low taxes for Indiana is something we have to keep foremost in our mind to keep us competitive and grow the economy.”

But a sweeping tax break for businesses would have major impact on local units of government already struggling with declining revenues, including those caused by local property tax caps that were imposed by the General Assembly five years ago.

The personal property taxes, paid by businesses on machinery, computers, furniture and equipment they use, bring in almost $1 billion a year to local governments and schools that use that money to pay their bills.

Communities with large manufacturing employers could especially be hard-hit. In some communities, the personal property tax produces more than 30 percent of their local revenue stream.

“It would be just devastating to some communities,” said Andrew Berger, government affairs director for the Association of Indiana Counties. “We’re talking about a dramatic cut in services in those places.”

Kokomo, which is heavily dependent on business personal property taxes paid by its largest employer, Chrysler Group LLC, led the charge against eliminating the tax when a Kokomo legislator, State Sen. Jim Buck, R, proposed lowering the floor on personal property depreciation, in the last Indiana General Assembly.

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