DENVER — The Colorado Association of Commerce and Industry’s Tax Council recognizes that repealing the unpopular tax that businesses pay on machinery, equipment and other personal property “is totally unrealistic,” the organization’s CEO acknowledged Tuesday.
CACI’s Chuck Berry also told a panel of lawmakers, however, that his organization’s members still feel that the personal-property tax hinders Colorado from competing with other states and nations for business investment.
“Taxes matter when business investment decisions are made” about expanding facilities or choosing a new location, Berry told members of the Legislature’s special Committee on Economic Development.
Last winter, CACI supported a bill that proposed phasing out taxes on businesses’ newly acquired personal property beginning with the 2005 property-tax year and continuing until all new business personal property would be exempt from the local tax in 2019. Existing machinery and equipment would continue to be taxed, although tax revenue from those items would gradually decline as their value depreciated.
Unable to get that version of the bill approved, Aurora Republican Bruce Cairns converted the measure, establishing the committee now taking a look at the business personal-property tax and other economic-development issues.
Cairns, the co-chairman of the committee, said Tuesday that he’d like the panel to revisit some version of his personal-property phase-out measure next year.
Last January, the Legislature’s staff projected that Cairns’ original bill would cost the state up to $13.8 million in fiscal 2005-06 and up to $22 million in 2006-07 because the Public School Finance Act would require the state to cover “backfill” lost business-personal-property-tax revenues for school districts.
The state would not have had to “backfill” lost revenue to other local governments, and legislative staffers estimated that the bill would reduce nonschool tax revenues by up to $25.2 million in 2005.
Although Senate President John Andrews, R-Centennial, favors cutting the business tax, he acknowledged Tuesday that simply repealing it would be “problematic.”
Andrews, who is term-limited and won’t be back for next year’s session, said lawmakers may have to “work around” the impact that eliminating the tax would have rather than pursuing “a formal head-on” repeal.
The Legislature’s lawyers are preparing to draft several business tax-break bills for the panel to consider next month, including the revival of Cairns’ unsuccessful measure.