Bill would suspend some business tax
Colorado businesses that purchase new equipment over the next two years would never have to pay business personal property tax on those articles under a bill approved by the Colorado House on Monday.
But whether that measure will lead to an increase in income and sales-tax revenue as its backers believe is unknown.
In theory, the measure introduced by Rep. Chris Holbert, R-Parker, is designed to stimulate the state’s economy by getting businesses to purchase new equipment. Holbert hopes that would lead to an increase in other taxes and possibly spur employers to hire new workers.
The bill passed the House on a 34–31 near party-line vote, with only one Democrat favoring it.
Other House Democrats said there’s no evidence that suspending the tax would boost the economy, and that it would cost the state millions because law requires it to backfill lost revenue to local school districts.
“We are guessing that jobs will be created ... we are guessing that income taxes will replace the lost taxes, and we are guessing that sales taxes will also be part of that replacement,” said Rep. Judy Solano, D-Brighton. “(These taxes) must be replaced by state aid. We can’t even fund the level of education now. How in the world would the state come to the rescue?”
The tax is based on the value of a business’ personal property that is worth more than $5,500. Last fall, Mesa County commissioners approved a two-year increase of that threshold to $150,000 as a way of spurring business growth.
Though the county had an overall 6.4 percent decrease in sales-tax revenue last year, sales taxes have been up since commissioners voted to lower the business tax last fall.
Commissioner Craig Meis said that while there’s no way to track whether lowering the tax has increased business activity, he’s confident it has.