Tax bill again draws praise, barbs

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HELENA -- Members of the legislative tax committees sat through a long reprise of familiar arguments Friday for and against the Schweitzer administration's proposals to crack down against alleged out-of-state tax cheats.

As they did throughout the regular session, business representatives denounced House Bill 5 as a power-grab by the Revenue Department to go after out-of-state businesses and individuals but then turn its auditors loose on honest, tax-paying Montanans.

However, as they did earlier this year, some ordinary Montanans testified it's time they received some tax reductions, not just the businesses that saw tax breaks through much the past 1990s and early 2000s.

The bill contains Gov. Brian Schweitzer's $400-per-household tax rebate, a renter's tax credit of up to $120 a year and an exemption from property taxes of the first $65,000 of equipment owned by a business.

The debate was over House Bill 5, sponsored by House Majority Leader Michael Lange, R-Billings. He was one of a dozen or so House Republicans who reached an agreement with top aides of the Democratic governor last weekend to end the stalemate that bitterly divided the 90-day regular session.

This bill was a key component of the deal because it provides an assortment of one-time and ongoing tax reductions. It pays for business equipment tax exemption by requiring tax withholdings on Montana land sold by out-of-staters.

The House Taxation Committee will vote on the bill today. Chairman Bob Lake, R-Hamilton, said he expects a number of amendments to the bill. He said he backs some of the deal, but doesn't support the Revenue Department proposal to require out-of-staters selling land in Montana to collect withholding taxes to make sure capital-gains taxes are paid.

Lange said with state government enjoying a record $1 billion projected surplus, he came to Helena with a single goal: "That's to provide as much tax relief as I possibly could."

Lange said the bill would provide $126.7 million worth of tax relief at a minimum, but up to $147 million at a maximum.

"I don't call it chump change," Lange said, which is how House Speaker Scott Sales, R-Bozeman, dismissed the tax cuts. "It's real money. It's cash."

In a bipartisan move, Rep. Jill Cohenour, D-East Helena, also endorsed the omnibus bill, saying it offers "historic levels of property tax reductions."

"It's not all that the Republicans wanted," she said. "It's not all that the Democrats wanted. It's a compromise It's balanced."

Mike Boyza, a union carpenter, endorsed the bill, saying, "It's time for regular people to get a break.Working people will put the money back into the economy."

In opposing the bill, Sen. Bob Story, R-Park City, said while he supports parts of the measure, he disagreed with the notion that with a large budget surplus, the administration couldn't find the money to pay for tax relief.

Representatives of title companies objected to the bill's requirement that they would have to collect income taxes when out-of-staters sell land in Montana. These costs would be passed on and would raise real estate closing costs, they said.

"The Department of Revenue is the tax collector for the state of Montana," said William Gowen, vice president of Helena Abstract and Title. "Title companies are not."

Glenn Oppel of the Montana Association of Realtors suggested the proposed change in law also could delay real estate deals.

Jon Bennion of the Montana Chamber of Commerce criticized the bill as "anti-business and anti-taxpayer."

Cary Hegreberg of the Montana Contractors' Association, said the bill will affect Montana businesses and taxpayers as well and "could result in auditors camped in their offices for weeks."

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