INDIANAPOLIS (WISH) – Plans to eliminate Indiana taxes on new business equipment won preliminary approval from both House and Senate lawmakers Thursday. But, a final vote on a compromise bill could still be weeks away.
House lawmakers voted 63-33 Thursday morning on a plan drafted by House Republicans that would give county governments the option of eliminating their tax on business equipment, known as the business personal property tax, or BPPT.
A separate Senate bill, crafted by Senate Republicans, was approved by a 35-11 vote late Thursday afternoon. It would eliminate all business equipment taxes, but only for small businesses. It would also cut the state’s corporate income tax.
Governor Mike Pence says the measures would help create new jobs by making Indiana more competitive in attracting companies from out of state. Many other Midwest states have eliminated BPPT taxes, Pence argued.
Some House Democrats weren’t sold on that Thursday.
“I guarantee you job losses under this proposal or any version thereof. Let me repeat that: there will be, absolutely, for sure, job losses,” said Rep. Ed DeLaney (D-Indianapolis)
He also argued costs would be passed down to consumers.
“This is a shift to all other taxpayers,” DeLaney told the House prior to the vote. “Circuit breaker losses would rise. This is a fancy way of saying that, if, for example, you’re in Hamilton County and you get rid of this tax, it will hit the homeowners. You will pay more.”
Local governments and school districts have argued that cutting the BPPT could cost them millions of dollars in annual revenue. Many are still working to deal with the impact of lower property tax revenues due to the Circuit Breaker law.
Rep. Eric Turner (R-Cicero), the House bill’s author, said the state is working to identify replacement revenue streams. But, he also stressed that the House plan would not require counties to cut the tax at all.
“I can appreciate that some mayors may not want to take advantage of this,” Turner told lawmakers. “There’s good news: they don’t have to. They don’t have to participate in this. This is local option. Counties can decide what they want to do.”
Legislators will now attempt to write a compromise bill that could be put up for a final vote. It’s unlikely that vote would be called for at least several weeks.