Republicans advance bill on business tax break
Colorado businesses could get a two-year break from paying business personal property taxes on new equipment even though it’s projected to result in about $283 million in lost revenue for local governments.
Republicans in the Colorado House gave preliminary approval to that idea Wednesday over the objections of Democrats, who said there’s no evidence it would lead to an increase in jobs or sales tax revenues as GOP lawmakers claim.
“I’ve heard two messages today. One was from a Nigerian gentleman who said that if I helped him repatriate $500 million to the United States, I’d get to keep $75 million for myself,” quipped Rep. Daniel Kagan, D-Denver. “The other message I heard today is that if we give ... about two- or three-hundred-million dollars in tax breaks, we’ll all be better off because the money will still come flowing in. I haven’t decided which one I believe more.”
Rep. Chris Holbert, R-Parker, said it makes sense to alleviate tax burdens on businesses during a recession. Additionally, the bill applies only to new equipment purchased in 2012 and 2013, so it won’t substantially damage local governments’ budgets, he said.
Holbert, who introduced HB1141, said the way things are now, businesses are discouraged from investing in new equipment because they’ll have to pay more in taxes. Temporarily suspending it would stimulate the economy by boosting sales as businesses replace aging equipment, he said.
“The only way it would have a devastating effect on any county is if a business sheds all of its business personal property and buys 100 percent of it new during those two years,” Holbert said.
Rep. Jim Riesberg, D-Greeley, said the idea that suspending the tax will result in increased sales assumes those businesses will buy new equipment in the state, something that isn’t guaranteed.
Rep. Laura Bradford, R-Collbran, told legislators the Mesa County Commission voted a year ago to stop assessing the tax and that the county has managed just fine without it.
But Rep. Andy Kerr, D-Lakewood, said the Legislature approved a law in 2008 exempting small businesses from the tax if their equipment was valued at less than $5,500. That didn’t lead to an increase in sales or a decline in unemployment, he said.
Although the tax is only assessed by local governments, it would cost the state money, too, by requiring it to backfill more than $100 million in lost revenue for school districts.
The bill requires a final House vote, which could come as early as today.