MATT GOURAS Associated Press Writer HELENA
Efforts to further cut the state tax on business equipment are percolating in the Legislature, but face big hurdles amid tight partisan divides. A Republican plan pitched in a House committee on Monday would exempt the first $100,000 of business equipment from taxation, at a cost to the state budget of about $60 million over the next two years. But the governor's office said it will be endorsing its own ideas for giving small businesses relief from the business equipment tax, and opposed the new plan from Republican Rep. Bob Lake. Lake, chairman of the House Taxation Committee, told his panel that his proposal is needed to give small businesses a break during the recession. Cuts in previous years have exempted businesses with less than $20,000 in equipment. But Lake said the problem with that system is that anyone with over $20,000 in equipment, even by just a small amount, has to pay tax on all of their equipment. Lake not only wants to increase the exemption to $100,000, he wants to exempt the first $100,000 in value of equipment for everyone. He said that would help all businesses. "I want you to think about the rancher, the farmers the ma-and-pa operations up and down main street. These are the ones that need your help," Lake told the committee. Business groups lined up to support the plan, pointing out that they even have to pay the tax on equipment idled by the recession. "This is a big issue for us," said Jason Todhunter with the Montana Logging Association. "The logging industry is very capital intensive." But opponents, led by the governor's office, said the proposal gives too large a break to nonresident corporations. Eric Stern, senior counselor to the governor, said the governor's office is developing its own plan for lowering the equipment tax, and said it will cost the treasury less by withholding benefit to large, out-of-state corporations. "The problem we have with this piece of legislation, is this cut in taxes should be targeted to small businesses," Stern said. He said large companies will invest in Montana based on other reasons than the proposed tax exemption. The governor's office said it also believes the large price tag on Lake's plan will force a cut in services or a tax shift Onto others. But either plan will need bipartisan support if it is to have a chance. Democrats have organizational control of a Hous e spl i t 5 0 - 5 0 , whi l e Republicans control the Senate. And Schweitzer, a Democrat, has veto power. Lake said there will be several more proposals coming forward, and he envisions a compromise could be possible as the session wears on. "Our job is to take the best ideas of all this," Lake said. "I very well will be political, but at some point in time we will put politics aside."