More study ordered for tax measure

A constitutional amendment to eliminate the approximately $425 million in taxes and fees on personal property, such as desks, computers or cars, will be studied further before being placed on the ballot.

The proposed amendment to the Utah Constitution in HJR12 will be studied either by the House Revenue and Taxation Interim Committee or by a proposed Tax Reform Task Force. The resolution was sent to interim study Tuesday on a 10-1 vote in the House Revenue and Taxation Standing Committee.

Because the amendment could not even be placed on a ballot until the next statewide general election in November 2006, sponsoring Rep. John Dougall, R-American Fork, did not object to the resolution being studied further. His goal was to get legislators, tax assessors and taxpayers discussing the proposal, which is why he drafted the resolution "very broadly" and with an across-the-board elimination of the personal property taxes and fees.

"It's very simple, but it has broad ramifications," Dougall said. "I believe this is an important part of tax reform."

Dougall said he was mostly concerned with helping small business and home-based business owners, who spend large amounts of time trying to account for all of their business-related personal property. Additionally, business owners have to keep records of the purchase date and price of their personal property, which can include even minor things such as office supplies.

Even businesses that are not earning a profit "pay these personal property taxes," Dougall said. "This has a greater impact on business than other tax reform."

The greatest beneficiaries of the personal property tax elimination would probably be utility companies, airlines or others with high-value equipment. In Emery County, for example, PacificCorp would save almost $8 million in taxes, a revenue stream that would require an average property tax increase of $1,100 per homeowner just to maintain, said Brent Gardner, executive director of the Utah Association of Counties.

"This is a tax shift, not a tax reduction," he said. "There is a potential for $425 million to be shifted from personal property to real property . . . that amount is too big to not be shifted."

Rep. Gordon Snow, R-Roosevelt, said that while he agreed that the personal property tax administration needed to be examined to try to reduce the bureaucratic stress for small businesses, the potential impact to some small counties was simply too big to even consider eliminating it completely.

"It's an important issue, and as a small businessman, I sympathize," he said. "But it just doesn't work for some counties, and it needs to be studied."

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E-mail: jloftin@desnews.com