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Local News

December 9, 2013

Business groups, mayors at odds over tax revenue

Local governments ask what will replace it.

TERRE HAUTE — Who would have believed that old fork lifts, barber chairs and aging computers could capture the attention of so many folks around the state?

But taxes on those items — equipment known as “business personal property” — generate revenue for local government, helping pay for police, teachers, libraries and more.

Republicans, including Gov. Mike Pence, say they will propose legislation in the new year to reduce or eliminate the tax as a way to attract new investment in the state. However, mayors, school officials and other local government leaders are resisting lest they lose a big share of their annual revenue.

In 2012, the state collected nearly $1 billion in personal property taxes, which all businesses must calculate based on the value of their equipment. The tax covers everything from office furniture and shelving to massive production machinery.

Sony DADC, a big electronics manufacturer in Vigo County, paid $3 million in 2012. Even small businesses feel the tax. A Terre Haute tanning salon paid $894 last year on $29,000 in equipment, according to the assessor’s office.

Most of the state’s property taxes come from residential and commercial land and buildings, but a significant portion — about 16 percent — comes from personal property, according to state figures. Losing that would be a blow to cities, towns, schools and public library districts.

Without the tax, the City of Terre Haute would suffer a cut of more than $4 million from its already strapped budget, said Republican Mayor Duke Bennett, an opponent of eliminating the tax. The city’s sanitary district would lose $1 million, he said.

Vigo County Assessor Debbie Lewis said losing that revenue would have a greater effect than lifting the tax on business inventory a decade ago.

Matt Greller, executive director of the Indiana Association of Cities and Towns, said local governments will need new sources of revenue to replace the lost tax or face cutting “vital public safety services and other things that residents absolutely need and expect.”

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