Business tax paybacks

BOISE - State tax incentive legislation introduced Friday - that borrows a page from Utah's economic development playbook - would make Idaho more economically competitive with the Beehive State, a North Idaho legislator said.

The maximum $3 million annual tax break gained the initial approval of the House Revenue and Taxation Committee.

Driven by the Idaho Department of Commerce, the tax rebate - promoted as an attempt bring new jobs and dollars to Idaho's economy - was called "a game changer," by Jeff Sayer, the director of IDC.

While many states - such as Utah - are offering attractive economic development incentives to successfully attract and retain businesses, Idaho trails them, according to Sayer.

Sayer touted the draft legislation as a business expansion measure that would give businesses expansion incentives without using state general fund dollars to start with. The paybacks would be given to companies that have expanded in Idaho or started new operations within the Gem State, achieved success, and paid state taxes.

"The incentive is that we're reimbursing taxes that have been paid," Sayer said.

The rebates under the terms of the complex legislation would come from "new corporate income tax, sales tax, and payroll taxes paid as a result of a new qualifying project," according to a bill description.

"Bottom line is that the world we live in requires that we have incentives on the table that are competitive," Sayer said during print hearing testimony before the House tax committee. "So that's one of the things that has been a wake-up call for us."

Rep. Ed Morse, R-Hayden, said the proposed legislation could help Idaho to provide a competitive answer to what has happened in Utah - where Sayer said the Beehive State has parlayed business incentives into new payroll of more than $22 billion since 2009.

"The information that Director Sayer's office has provided to legislators indicates that No. 1, (the business incentives have) been very successful for Utah, and No. 2, it has provided Utah a recruitment advantage against Idaho," said Morse, one of the nascent bill's co-sponsors. "Bringing in medium-sized companies to boost your economic base has become quite competitive."

Morse characterized the legislation as "another tool," for Commerce and communities to "lure business, boost employment."

"It's not just for recruitment of out-of-state business," Morse said. "In-state businesses that meet the qualifications and criteria also qualify."

Morse said the legislation would level the playing field for Idaho in recruiting businesses against Utah and other states.

"Certainly against Utah and other states for which we are competing, at the same time we have existing businesses, and I believe that (bill) provides an economic development and an incentive to go forward with expansion in this state, too," Morse said.

If the bill becomes law, the measure would offer the tax rebate to in-state and relocating companies on negotiated incentive terms, under the condition that proposed business projects would bring "quality jobs," to Idaho. Sayer said the measure could bring more high-paying, high-technology jobs to Idaho.

Like an Academy Awards speech, Sayer thanked members of the Legislature, the office of Idaho Republican Gov. Butch Otter, the State Tax Commission, state Chief Economist Derek Santos, economic development professionals, Idaho business leaders, "and people around the state who have rallied to the cause."

Idaho Speaker of the House Scott Bedke, R-Oakley, said this week that he supports the legislation. Acting House tax committee chair JoAn Wood, R-Rigby, said a full hearing date has yet to be set for the legislation.

"I feel (the bill) is a very strong piece of legislation that can literally accelerate our economy forward and help us move into the 21st century as a state," Sayer said.