|
HOUSE
PASSES MAJOR PROPERTY TAX REFORM BILL
The Iowa House passed
House File 847 Thursday, a bill which looks to reverse the
current property tax climate that burdens Iowa employers. The
bill ties together residential, agricultural, commercial and
industrial property by limiting the percent increase of all
classes to the class of property that has the lowest percent
increase under the allowable four percent limit.
What this means to the
property taxpayers is if valuation for residential property
increased by 10 percent, agricultural land increased by one
percent, commercial increased by 15 percent, and industrial
increased by three percent, each class would be limited to a
valuation increase of one percent for the next tax year.
“For years, every
legislator has heard and knows what every Iowan knows: property
taxes in this state are too high and are a detriment to doing
business,” said House Speaker Christopher Rants, R-Sioux City.
“There are a number of reasons Iowa is not growing, and our
property tax system certainly does not help the situation.”
The bill slows the
assessment growth of Iowa businesses, thus preventing the
double-digit increases that Rants feels have become all too
common for Iowa employers.
According to the
non-partisan Iowa Taxpayers Association, Iowa’s commercial
property tax rate ranks third highest in the country, which is
76 percent higher than the national average.
The bill could be
especially helpful to Main Street businesses in small town
Iowa. High property taxes drive locally owned and/or operated
businesses out of business. It is difficult for small towns to
stay afloat, let alone grow, if their commercial/industrial tax
base is driven under.
Iowa’s largest
employers should also see a benefit which would allow them to
continue to hire Iowans and bring new residents to the state.
The bill will not have
an impact on property assessments for homeowners and farmers.
There is no shift in tax burden between classes, which has led
the Iowa Association of Realtors – one of the largest
associations in the state lobbying for lower residential
property taxes – to support the bill.
“It’s ironic that in a
state where we trumpet a fund giving grants to businesses, we
turn around and swipe their profits through an unfair,
burdensome property tax,” said Rants.
The bill also creates a
property assessment appeal board to serve as an intermediary
step between the local board of review and the district court.
This board allows for an additional appeal opportunity before a
property tax owner is forced into district court to challenge
the matter.
This board will allow
for a consistent, fair and equitable property assessment appeals
process for all classes of property throughout the state. As
such, it will be a less expensive opportunity to correct errors
caused by local assessors.
“It is a property tax reform
and taxpayer protection measure,” said House Majority Leader
Chuck Gipp, R-Decorah. “This is the first step in a long journey
of fixing our property tax structure."
NEW SALES TAX EXEMPTIONS APPROVED THIS
SESSION
Over the course of this
legislative session, the House Ways and Means Committee has
approved several new exemptions from the state sales tax.
House File 310 provides
for a sales and use tax exemption for purchases of toys made by
a nonprofit organization (example: Marine Corps Toys for Tots
Program). The exemption is for purchases of toys from cash
donations the organization has received. It is expected that
this bill will have minimal fiscal impact to the state’s general
fund. The House approved House File 310 on February 23 by a
99-0 vote.
House File 606 provides
for a sales tax exemption on the purchases of clothes washers,
refrigerators, and dishwashers that meet Energy Star
requirements. Energy Star is a program established by the
Federal Environmental Protection Agency and the Department of
Energy. The program identifies appliances meeting certain
energy efficiency standards. The sales tax exemption in House
File 606 will likely reduce general fund revenues by
approximately $3 million per year, beginning in FY 2007.
|
House File 844 provides for
a sales tax exemption on the purchase of coins, currency, and
bullion sold to retail customers in Iowa. This bill stemmed from
the fact that gold, silver, and platinum are the only commodities in
Iowa sold as investments that are subject to sales tax. This sales
tax exemption will likely reduce general fund revenues by
approximately $365,000 per year, beginning in FY 2006. The House
approved HF 844 on April 19, by a 57-41 vote.
House File 856 provides for
a sales tax exemption to Habitat for Humanity on the purchase of
building materials and supplies used in the construction or repair
of one or two family low-income homes. It is expected that this
bill will have a minimal fiscal impact to the state’s general fund.
House File 864 provides for
a sales tax exemption on the
sales of materials and services furnished pursuant to a
written construction contract for the construction of a
building and any addition to a building to be used as a
collaborative educational facility - in this case, the Des
Moines Higher Education Collaborative John & Mary Pappajohn
Education Center. HF 864 also allows for a refund of taxes paid on
construction materials. It is expected that this bill will reduce
general fund revenues by approximately $200,000-$300,000.
House File 866 provides for a
sales tax holiday on the purchase of computers. This bill would
simply add computers to the exemptions during the Iowa Sales Tax
Holiday weekend. HF 866 is expected to reduce general fund revenues
by approximately $780,000 per year.
Ways
& Means Update
Bills introduced in committee this week:
HSB 296 A study bill
providing an exemption from and a refund of sales and use taxes on
materials and services used in the construction of a building or
addition to a building to be used as a collaborative educational
facility and including effective and applicability date provisions.
HSB 298 A study bill
relating to the establishment by certain cities of sales tax
increment financing districts.
HSB 301 A study bill
relating to sales and use tax changes, excise taxes on rental of
rooms and sleeping quarters, and the sale and use of construction
equipment, and including an effective and retroactive applicability
date provision.
HSB 304 A study bill
relating to the technical and policy administration of the tax and
related laws by the department of revenue, including administration
of individual income, corporate income, local and state sales, use,
property, motor fuel, and special fuel taxes, and of the
environmental protection surcharge, imposing penalties, and
including effective and retroactive applicability date provisions.
development, business, workforce, and regulatory assistance and tax
credits, and to state developmental, research, and regulatory
oversight, making appropriations, and including effective date and
applicability provisions.
Bills passed out of
committee this week:
HF 868 A bill for an
act relating to economic development, business, workforce, and
regulatory assistance and tax credits, and to state developmental,
research, and regulatory oversight, and including effective date and
retroactive applicability provisions.
HF 869 A bill for an
act relating to tax credits provided for purposes of acquiring
agricultural assets by beginning farmers, and providing effective
and applicability dates.
HF 871 A bill for an
act providing for income tax credits for the cost of purchasing
health insurance coverage by certain small employers and providing
effective and retroactive applicability dates.
HF 874
A bill for an act relating to the regulation of whitetail, and
providing for fees and penalties.
|
Week
in Review Archives