Tax phaseout on hold

Montana State Roundup

Published March 1, 2005  | March 2005 issue

Gov. Brian Schweitzer is taking political heat for his proposal to preserve a tax on business equipment, rather than allow it to expire as the economy improves. Arguing that Montana needs the money to pay for government services and schools, Schweitzer has recommended repealing a law that would phase out the tax when wage growth hits minimum thresholds. The governor's budget office estimates that phasing out the tax beginning in 2007 would cost the state $196.6 million in revenues by 2010.

The Legislature halved the tax to 3 percent and enacted the phaseout six years ago, at the urging of businesses that said a lower tax would give them more money to pay higher wages and increase payrolls. Eliminating the economic "trigger" for ending the tax reneges on that pledge, Republican lawmakers charged, noting that another Schweitzer proposal includes a tax break on movie and TV production costs in the state.

To soften the impact of keeping the business equipment tax, Schweitzer proposed raising the value of exempt equipment from $5,000 to $20,000. But opponents of the measure countered that the higher exemption would bring little relief to businesses, because few companies own less than $20,000 worth of equipment.

Phil Davies