A Pence administration official says the governor supports a House Republican plan that would allow local governments to eliminate a tax on purchases of new business equipment.
Governor Mike Pence made elimination of the business personal property tax the centerpiece of his 2014 legislative agenda. The levy on business equipment generates about one billion dollars a year for local governments. House Republicans countered with legislation that would allow county boards to eliminate the tax only on new purchases.
Office of Management and Budget Director Chris Atkins, who expressed Pence’s support for the plan, notes that Illinois and Ohio don’t have a personal property tax and Michigan is phasing its out.
“So we do concede that taxes aren’t the only driver for economic growth but you don’t want to be too far outside the tax structure and climate, particularly of your neighboring states,” Atkins says.
But local government leaders are worried about any potential revenue loss. Angola Mayor Dick Hickman is the president of the Indiana Association of Cities and Towns. He says mayors and town councils have already stripped their budgets to the bone.
“I’m afraid if we make this change to our tax structure now eventually the businesses that you want to attract to Indiana will not want to come here because the cities and towns – where economic development begins – will be out of business,” Hickman says.
The legislation is being considered by the House Ways and Means committee, which held a hearing Tuesday but did not vote on the bill.