HELENA – Gov. Brian Schweitzer signed a bill Friday lowering the business equipment tax for all companies operating in the state, despite his stated reluctance to give tax breaks to large, out-of-state companies.
In a letter accompanying the signed bill, the Democratic governor said he still believes large corporations should not benefit from the cuts, but he could not veto the bill because Republican leaders had given him an “all-or-nothing choice.”
“I would also be throwing out the help to small businesses which this same bill provides. I will not do that,” he wrote in the letter to Secretary of State Linda McCulloch.
Schweitzer had favored his own proposal to eliminate the tax altogether for businesses with less than $1 million in equipment. He said his plan would have completely eliminated the tax for 17,000 businesses, leaving only 450 of the largest businesses, such as big oil companies with Montana refineries.
The GOP-led Legislature rejected Schweitzer’s proposal and instead passed a general reduction on the business equipment tax, a levy on items, including forklifts and farm machinery, that had been generally thought to be too high. The bill cuts the first $2 million in equipment from 3 percent to 2 percent for all businesses operating in the state.
It would be reduced further if certain economic triggers are met, and estimates say it would ultimately cost the state about $23 million a year.
The sponsor of Senate Bill 372, Republican Sen. Bruce Tutvedt of Kalispell, said the general reduction in the business equipment tax was fair and a better plan than creating a threshold that might discourage medium-sized businesses from expanding. The tax cut should provide an incentive for businesses to create jobs, he said.
“There is no silver bullet. You do incremental things that ensure Montana has a more favorable business climate,” Tutvedt said. “This is just one small step toward that.”
Jon Bennion of the Montana Chamber of Commerce said the new law will help the state’s agriculture, timber and manufacturing industries in particular.
“Senate Bill 372 is a pro-jobs bill that will lower the disincentive for small businesses to buy newer, safer, greener and more productive equipment,” Bennion said.
Schweitzer said Republicans for 20 years have said they want to eliminate equipment taxes for small businesses, and his bill actually did that. He faulted the GOP for originally linking their plan to Senate Bill 253, a measure he vetoed that would have repealed certain tax credits.
Schweitzer said that bill would have meant a big tax increase for homeowners.
“In my plan, everybody in Montana wins. In their plan, homeowners lose,” the governor said.