A bill that would swap most property taxes on owner-occupied homes for a state sales tax increase received a thumbs-down Wednesday from the non-partisan Idaho Center for Fiscal Policy.
The complicated plan would boost Idaho’s six percent state sales tax to 7.85% - the highest base rate in the nation. Many residents in other states pay higher rates due to additional local sales taxes.
To help balance the increase, House Bill 741 would increase the standard grocery tax credit by $75.
"Folks who are renting and on the very lower end of the income spectrum, who are not required to file taxes, may not be able to collect the credit," said Alejandra Cerna Rios, Director of the Idaho Center for Fiscal Policy.
She says the lowest income earners typically spend more than one-third of their income on taxable goods. The Center is officially opposed to the bill.
Lawmakers' appetite for a sales tax increase amid spiking inflation may also be in question. A hearing for the proposal in front of the House Revenue and Taxation Committee had been scheduled for Thursday, but the agenda was pulled and the panel will not meet.
Committee chair Rep. Steven Harris (R-Meridian) confirmed Thursday by email the agenda change was made at the sponsor's request.. Harris did not indicate if the bill would return to the committee this session.
"I think legislators are very attuned to the effects of tax policy on their particular constituency," Cerna Rios said. "I have heard, loud and clear, I think lawmakers understand that the increase in rents have been an issue for their constituents and they follow those impacts closely."
Calls to the bill’s author and presenter, Senator Jim Rice (R-Caldwell), were not returned.
