Too early to judge

March 20, 2008 12:05 am

— Lawmakers accomplished what everyone agreed was their top priority for the session just ended.
They approved a plan to cut the average homeowner’s tax bill by about 30 percent. Of course, that doesn’t mean everyone will save money.
The state sales tax will go up a percentage point to 7 percent, effective April 1. That’s an increase of 17 percent, which means that at least some of what we save on our property tax bills we’ll be giving back at the cash register.
Tax caps would be phased in over the next two years, and by 2010, homeowners’ tax bills would be capped at 1 percent of total value. The tax on rental properties would be capped at 2 percent, and the tax on business properties would be capped at 3 percent.
The caps are projected to save property taxpayers about $524 million, money that would come out of the budgets of schools and local government. Lawmakers set aside $120 million for schools over the next two years to soften the impact of the caps.
Still, the measure will force some tough choices at the local level. County councils, however, have the option of approving an income tax to make up for some of the lost revenue.
Some critics of the tax plan have gone so far as to predict an overall tax increase.
The bottom line is that there is no free lunch. Local taxpayers will feel the impact of the reduced property taxes not just in terms of lower tax bills, but perhaps also in terms of reduced services.
Still, property owners got their message across. They demanded relief from rising property taxes, and they got it. Whether they’ll end up liking the result remains to be seen.
– Pharos-Tribune, Logansport, and Kokomo Tribune