HELENA – Separate plans to further cut business taxes and to insulate property taxes from increasing property values advanced Monday at the Legislature.
The Republican-controlled Montana Senate approved the business equipment tax cut on a 32-18 vote.
Right now, the first $20,000 in equipment is exempted from the tax. Senate Bill 490 would exempt one-third of equipment valued up to $5 million. It could cost the state treasury more than $10 million a year.
Supporters argue that reducing the tax will spur economic activity.
But it comes at a time when lawmakers are facing tough budget decisions amid dropping revenue projections. More tax cuts would mean they would have to take a bigger knife to the state budget plans.
“I think in these difficult times we would all like to be an advocate for small business,” said Sen. Kim Gillan, D-Billings. “I think right now this is a very significant giveaway.”
The plan faces tougher scrutiny in the House split 50-50 between the parties.
The House passed the so-called property tax mitigation bill on a 75-25 vote.
House Bill 658 follows the same method used in the past to lower property tax rates to offset increased property values. The plan uses phased-in tax rates and homestead exemptions to effectively lower taxes.
Under the recently completed statewide reappraisal, the value of residential property on average shot up by 55 percent cumulatively from January 2002 to mid-2008. But increases will vary widely by county and within counties for individual homes
Both measures move to the opposite chamber and could be changed significantly.