HELENA (AP) - The taxable value of business equipment property dropped slightly in tax year 2003, renewing debate over whether such tax breaks for businesses really spur economic development in the state.
Sen. Jon Ellingson, D-Missoula, said the latest figures are more evidence that the tax breaks passed by Republican-controlled Legislatures in recent sessions have not worked.
Sen. Mike Taylor, R-Proctor, sponsor of a major 1999 tax reduction for business equipment property, said it takes time to see an economic turnaround after tax cuts. He predicted that turnaround will still occur, possibly beginning as early as next year.
Figures from the Montana Revenue Department show the 2003 taxable value of business equipment property dropped by $51,938, to just under $118.3 million.
However, that slight loss came after a much larger gain in previous years. The taxable value of business equipment grew from $116.6 million in tax year 2001 to $118.34 million in tax 2002.
The taxable value is the market value of the property, minus depreciation, times the 3 percent tax rate. That taxable value is multiplied times the local mill levy to produce the yearly property tax bill.
Montana's property tax on business equipment has dropped over the years. The 1995 Legislature lowered the rate from 9 percent to 6 percent. In 1999, Taylor's measure dropped it to 3 percent with the possibility of being phased out over three years if the state hits a certain economic trigger.
That trigger has not yet been met, so the tax is expected to remain at 3 percent for another year.
Lawmakers have debated extensively the pros and cons of cutting the business equipment property tax rate in recent years.
''It's clear that the Republican strategy of cutting taxes in the hope of attracting more business investment has failed,'' Ellingson said. ''As the tax rate on business equipment has been lowered, there has been no resulting increase in business equipment investment. This leads to the unmistakable conclusion that the Republican strategy has failed ...''
Ellingson said the tax rate cuts have lowered the revenue available to pay teachers, moderate tuition increase in the university system and provide health insurance to more uninsured children.
Taylor countered that Montana is seeing some gains, noting that it was one of only two states to see growth in technology sector jobs this year.
As for the drop in taxable value, Taylor said, ''When you give a tax reduction or incentive, it takes a company three or four years to take advantage of that.''