Business equipment tax headed toward delay

Lawmakers considering a cut to Indiana's tax on business equipment might leave the matter to a summer study committee, a move that would delay any action by at least a year.

House Republicans, who have proposed allowing counties to decide whether they will cut the tax, made their pitch to the Senate Tax and Fiscal Policy Committee on Tuesday.

But Senate Appropriations Chairman Luke Kenley, R-Noblesville, said the issue might be too complicated for this year's short legislative session. Kenley said many of the people who would be affected by such a cut, mostly local leaders, should be brought into the discussion.

"I'm wondering if this discussion isn't more complicated than we think it is and we don't need all those people at the table," Kenley said during a hearing. "And maybe the smart thing to do is to back up and pursue this and try to get it right. I'm just not sure we really got to the bottom of the whole issue here, in terms of where Indiana wants to go."

House Speaker Brian Bosma, R-Indianapolis, said Tuesday that the issue has already been highly vetted by lawmakers and some sort of cut needs to happen this year.

"We've been dealing with that issue in the House for three years. We've studied it to death. We know the effects," Bosma said. "Our plan, which is totally an option for communities, is geared just to the result of our review of this for three years."

House and Senate Republicans have advanced widely differing ways for cutting the tax. The Senate Republican plan, which proposes eliminating the tax for small businesses and cutting the state's corporate income tax from 6.5 percent to 4.9 percent, also calls for the creation of a committee to study the issue.

The proposals respond to Gov. Mike Pence's suggestion that the state phase out the equipment tax completely. Supporters say a phase-out is needed to improve the state's competitiveness. Opponents have said it would hurt local governments.

David Bottorff, executive director of the Association of Indiana Counties, said he's pretty confident lawmakers will at least study the issue over the summer, but is unsure whether they will make any cuts this session.

"I think they're still considering a merger between [the House and Senate plans]," Bottorff said. "I think everybody agrees a study committee is going to happen and I think they're trying to come up with an agreeable solution that would take parts of [both plans]."

Pence spokeswoman Kara Brooks said the governor would not support delaying a tax cut until at least next year.

"We don't believe that Hoosiers want to wait as businesses make decisions today that could bring investment and new jobs to the state," Brooks said.

Bosma noted that the state's fiscal leaders had not reached a final compromise yet. Compromises on some of the session's toughest issues are typically hammered out during the final hours and days of the session, which is scheduled to end March 15.