Kerry White (R) HD64 has done the seemingly unthinkable. He has introduced HB300, the restructuring of tax collections and distribution through the implementation of a sales tax.
Before making uninformed judgements and being emphatic naysayers, let's put aside hasty reactions and take a measured look at HB300.
At 426 pages, the legislation is behemoth. Any tax bill of this caliber will be. At the heart of it, HB300 replaces the Class 3 agricultural property tax, Class 4 residential property tax, and Class 10 forest land tax with a 2.5% sales tax excluding groceries, medical, and a few other exceptions. (The Montana Constitution presently limits a sales tax to 4%.) Every year for the entire month of October there is a tax holiday (no sales tax at all) under HB300.
A property tax is a perpetual lien that makes full, clear, and unencumbered ownership impossible. As Montana’s extraction industries have significantly contracted due to a myriad of political reasons, and the State’s economy has moved toward tourism and medical care, the costs of government programs and services have shifted heavily to property owners. Burgeoning property taxes are forcing property owners on fixed incomes out of their homes. Property taxes create a Department of Revenue bureaucracy that employs proprietary algorithms to questionably valuate and appraise properties for the purpose of imposing said taxes. Montana brick and mortar business owners are competing against dot-com businesses that pay no property taxes in the state. We are fast approaching the place where the turnip has no blood. Property owners are simply not going to continue to tolerate the lopsided burden.
A sales tax creates a broad tax base. Everyone ends up with skin in the game. A carve out for groceries, medical, and a few other exceptions makes the tax about as “fair” as a tax can be. But not to be downplayed is the imposition on businesses to collect the tax and forward it to the State. There will be added time commitments and costs that will be cumbersome.
IF the property tax were to be constitutionally eliminated with no prospect of being revived, IF the sales tax were to remain capped at 4%, IF State spending was cut, IF there was additional consideration of also eliminating the income tax, IF… So many IFs.
HB300 is not perfect; there are many contingencies. Our big takeaway is that we need bold, radical ideas like this to tackle problems that cannot continually be left for a later date. The time to start the serious dialogue is now.
We encourage each of you who reads this to think it through, weigh the pros and cons, and contact your representative and senator with your respectful comments.
To Kerry White we say THANK YOU for the courage to endure the criticism, vitriol, and ridicule. Your vision to move Montana’s tax structure in a more equitable direction is appreciated.
Paid for by: Montanans for Limited Government
Kathy Kay, Treasurer
PO Box 1154, Lolo, MT 59847