Idaho proposes eliminating most property taxes, raising sales tax to nation’s highest

On Friday, a state House committee in Idaho introduced comprehensive tax legislation that would increase the state’s sales tax to the highest in the nation as it looks to eliminate the majority of property taxes on owner-occupied homes.

The House Revenue and Taxation Committee sent its approval for a possible hearing on the bill that will also use some of the increased sales tax funds to increase the grocery sales tax credit from $100 to $175.

The legislation will push Idaho’s sales tax from 6 percent to 7.85 percent, which would be the highest in the nation, as noted by the nonprofit Tax Foundation group that analyzes tax policies across states. Currently, California has the highest sales tax rate at 7.25 percent.

City and county taxes would be cut on primary residences in the Idaho, although voter approved bonds and school levies would be allowed to stay.

“The beauty of this is you’re taking a narrow tax and you’re replacing it with the broadest possible tax,” commented Republican Sen. Jim Rice. “So people that don’t live in the state of Idaho that come visit in our state, vacation here, drive through, will help pay for the services that they get the benefit of in our state.”

But several lawmakers seemed to have a difficult time getting through the 41-page bill. “Everything on this looks good, sounds good, but I just have this niggling feeling that it may not be as good as it all looks,” said Republican Rep. Linda Hartgen.

Democratic Rep. Lauren Necochea added her concerns that the state’s businesses could be hurt as there would be an incentive for Idahoans to purchase items in other states with lower sales taxes. “This is going to increase people’s incentive to go across the border to buy, especially big-ticket items and their regular groceries.”

It is possible that the bill could be sent back to the House Revenue and Taxation Committee next week for a public hearing.




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