SARAH COOKE Associated Press Writer
HELENA A GOP proposal to cut the state tax on business equipment and increase the amount of exempt property was endorsed by the House on Friday. Republicans said cutting the tax from 3 percent to 2 percent and raising the exemption rate for $100,000 in property will boost economic development and help small-business owners hit hard by equipment costs. Currently, up to $20,000 in equipment is exempt. “Our economy has a spurt every time that tax is pulled down,” said bill sponsor Rep. Bob Lake, R-Hamilton. The House endorsed the proposal, 62- 38, and sent it to the House Appropriations Committee for further review. Gov. Brian Schweitzer wants to expand the exemption rate to $150,000 in equipment but isn’t proposing any cuts to the tax. That proposal, sponsored by Sen. Jim Elliott, D-Trout Creek, is making its way through the Senate. Some House Democrats said they had no problem raising the exemption rate but could not support the tax cut, which many called a “tax shift” from businesses to homeowners. “Most of this tax break is going to go to those largest companies that have their headquarters out of state,” said Rep. Jill Cohenour, D-East Helena. “This money is not going to be spent in our local communities or doing things for our kids in our local communities.” Rep. Bill Nooney, R-Missoula, said companies benefiting from the equipment tax cut will still pay “huge amounts of business taxes” to the state, giving them the ability to pay higher wages and create more jobs. Other Republicans said lower business equipment taxes are needed to compete with neighboring states. North Dakota and South Dakota don’t tax business equipment, and the rates are much lower in Wyoming and Washington state, Lake said. “Would you rather see our businesses go to Wyoming?” said Rep. Janna Taylor, R-Polson. “We advertise for business. Are we open for business, or are we not open for business?” Republicans tried to abolish the tax in 2005, but could not kill a bill backed by Schweitzer and other Democrats who kept it from fading away. Cohenour said even small cuts to the tax would cost the state in the future. “Who’s going to want to come back in future years and actually raise this tax when the economy drops out?” she said. “We’re not going to want to raise this, but we’re going to have to go back to taxpayers and ask them to pick up the bill for this.” The bill is House Bill 529.