A study conducted for the Regional Chamber of Northeast Indiana indicates eliminating the personal property tax on Hoosier businesses could cause stress on local government budgets in the 10-county Northeast Indiana region. The Regional Chamber urges lawmakers to review the study and fully understand the potential impact of changing tax law as they work to make Indiana more attractive to new business.
Unlike some Midwestern states, Indiana businesses now pay property taxes on all the machines, computers, furniture, and equipment they use. Discussion on the impact of eliminating personal property taxes is on the agenda of the Commission on State Tax and Financing Policy on October 4. Proposals to repeal the personal property tax have been introduced in the past and will likely be deliberated during the 2013 legislative session.
Regional Chamber Executive Director John Gerni says this study details the impact of reduced tax revenue on local units of government in the region if such a proposal was enacted. “The study demonstrates that if the business personal property tax is eliminated in total, it would have a material impact on local government finance in many jurisdictions. The Regional Chamber is an advocate for public policy that promotes a favorable business climate in Northeast Indiana, and supports efforts to make Indiana more competitive from an economic development perspective.”
Businesses have suggested that a repeal of personal property taxes would benefit economic development efforts and allow Indiana to compete with surrounding states that do not collect such a tax. Gerni noted that Indiana has a favorable business tax environment and said that the Regional Chamber is open to any proposal that would enhance economic growth in the region. He added that “Indiana ranks 1st in the Midwest and 11th nationally in the Tax Foundations’s Business Tax Climate Index.”
The study commissioned by the Regional Chamber found eliminating the business personal property tax would affect each of the area’s 10 counties differently because of broad variations in the total of business personal property tax assessments. For example, the study projects Allen Co. governments could lose up to 8.8% of their tax revenue. The City of Fort Wayne has the largest projected loss at $9.4 million dollars. Steuben Co. would see the smallest impact, losing 1.7% of property tax dollars. The average impact across the 10-county Northeast Indiana region is a loss of 7.3% of tax revenues.
Gerni makes it clear that the Regional Chamber intends to be involved in the discussion and seeks a solution that will enhance economic development for Northeast Indiana. “There could be a number of ways of threading the needle to make Indiana more competitive without squeezing local governments,” Gerni said. “Our role is to encourage discussion on the issue and then engage in finding a solution that attracts investment, and yet allows governments to deliver services in an efficient manner.”
The study was prepared by Larry DeBoer, Ph.D., Professor of Agricultural Economics at Purdue University and the Community Research Institute at IPFW. A full version in PDF form is available for download at the Regional Chamber’s website, www.neinadvocates.com.