Ind. counties may decide tax exemption

TIPPECANOE COUNTY, Ind. (WLFI) – Whether or not some businesses pay taxes on their equipment may be decided by the county where the business is located.

Lawmakers made significant changes to a pair of bills that would eliminate the business personal property tax. A proposal that could have wiped out millions of dollars for local governments.

“Initially we were pretty alarmed,” West Lafayette Mayor John Dennis said. “We thought we were in a position to lose a substantial amount of revenue to our general fund, and that would have had an adverse impact on us providing operations to the city.”

Now, only business with less than $20,000 in equipment may be exempt from the tax, and Indiana counties get to decide.

“These are relatively small businesses, so it really wouldn’t affect attracting a new manufacturing facility or even attracting a retail facility because that threshold is so low,” Tippecanoe County Commissioner Tom Murtaugh said. “Who it’s really going to benefit are those folks who are operating a small business out of their home.”

The proposal, passed by the House and Senate, reduces business personal property taxes paid statewide by $13 million and shifts about $7.6 million to other tax payers.

Broken down, a study from Sen. Ron Alting’s office shows the City of Lafayette is projected to lose about $19,000 in revenue, Tippecanoe county is expected to lose about $14,000, and the City of West Lafayette is projected to lose a similar amount.

Dennis said although the loss is not as great as originally expected, any revenue loss can impact services provided by the city.

“We want to make sure we keep that level of services as high as we can, and we’ll do so as best as we can with the revenue that we currently have,” Dennis said. “Should that revenue drop, that could present a challenge to us.”

“Some of that loss is going to get transferred to other taxpayers whether it be homeowners, businesses, ag ground or that type of thing,” Murtaugh said. “We really need to analyze that, even though it’s not a huge number. We still would want to do a significant analysis of how that works.”

A board made up of West Lafayette and Lafayette city council members, county council members and incorporated town council members will decide if Tippecanoe County will eliminate the tax.

“The majority of those votes, which are distributed by population, would have to make the decision to eliminate it,” Murtaugh said. “What that means, essentially, is that any two of the three major councils — two of those could band together and decide to make the decision which would affect, countywide, the elimination of that personal property tax.”

Murtaugh said he would not be surprised if the county leans toward eliminating the tax. He said one of the reasons is because it would eliminate 50 percent of tax filings in the county.

The proposal is heading to the governor’s desk.

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