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Committee Recommends Eliminating Tax On Small Businesses

By Brandon Smith

Posted November 12, 2014

A study committee made up of Indiana governmental and business leaders wants the General Assembly to mandate the elimination of part of the state's business personal property tax.

The legislature passed bills in its last session that give local governments the options of eliminating the business personal property tax for new purchases and exempting small businesses from the levy.

A study committee on the issue is proposing making the small business exemption mandatory.

Committee chair Brandt Hershman says small businesses pay so little, eliminating the tax on them would be beneficial to county governments.

"They were literally processing tax returns that cost them more to process than they were receiving in revenue in many cases," Hershman says.

Exempting small businesses from the tax would reduce revenues by about $13 million.

And Indiana Association of Cities and Town executive director Matt Greller says while that doesn't seem like much in a statewide sense, it would impact some local areas more than others.

"It might encourage more small businesses to develop," Greller says. "It would certainly make it easier on them to stay in business. So, yeah, I think we can support it as long as there's that replacement revenue on the back side."

Hershman says the legislature might create a flat fee for small businesses to pay, which he says would eliminate the onerous compliance costs associated with the tax while reducing the fiscal impact to local governments.

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