Taxation

Basic Philosophy on Taxation

The Billings Chamber/CVB believes in a comprehensive tax plan requiring statewide reform that is equitable and takes into account the need for a responsible and efficient government. The tax structure needs to provide sustainable and adequate funding for necessary services and should promote planned economic development and growth through the creation of positive economic policies. This type of mandate requires broad support throughout the state from legislators, the business community, cities and counties, and the general public. The Chamber will continue to evaluate and weigh the pros and cons of any statewide sales tax legislation proposals and will work to move acceptable legislation forward.

As an alternative to passage and implementation of a general sales and use tax, the Chamber realizes that it may be necessary to devote its resources to passage of intermediate goals if a general sales tax meets substantial resistance. The most prominent of the alternatives would be expansion of the resort tax/local option taxing authority.

A crucial element of comprehensive sales tax reform must include, but not be limited to, significant reductions in property and/or income tax while remaining revenue neutral for Montana taxpayers and must return a portion of the tax collected to local government. If the option to be pursued becomes an expansion of the resort tax expansion or a local option tax, a significant portion of the tax collected must be returned to the taxpayer as property tax relief, implementation must be approved by a majority vote of the electorate, must have a stated purpose(s) for the funds proposed to be collected, and must have a sunset provision.

This will be a multi-year priority project and require participation in interim legislative committees, discussions with our area legislative candidates, our community partners, and local government officials, as well as creating comprehensive resident awareness. Once consensus is reached, it will be imperative that the Chamber and its community partners reach out to our counterparts statewide to build a greater coalition. Since tax policy is also created through rulemaking authority, the Chamber will be vigilant in defending current positions. With anticipated current biennium and potential future budget surpluses, maintaining or reducing current levels of funding in state government will be part of the Chamber’s overall taxation program of work.

Tax incentives should only be considered as an alternative option, and should be available to both new and expanding businesses. Tax policy should provide adequate funding for the public well being, without hindering the ability of business to create, compete and react in the free market. Government has an obligation to use tax revenue prudently, providing the best services at a reasonable cost.

During the 2007 session of the legislature, the Montana Department of Revenue proposed several pieces of legislation which would move authority for decision making from the local level to the state. The Chamber believes that consolidation of this authority is not in the best interests of the communities throughout Montana and will work to retain these powers at the local level.


Specific Issues
Tax Increment Finance and Business Improvement Districts
The Chamber supports the ability of Local Governments to establish tax increment finance and business districts that seek to promote economic development, infrastructure expansion and development, and taxable growth. The districts need to be established in cooperation with, and possibly benefit, other tax entities such as local school districts, cities, and counties. The Chamber continues to support The Chamber opposes any changes in the Tax increment Financing District rules and regulations as proposed by the Montana Department of Revenue and supports being a part of any coalition that may be formed to oppose these changes in the rules and regulations.

Expansion of the Resort Tax Authority/Local Option
The Chamber supports the removal of resort tax limitations which would allow for all communities in Montana to determine whether or not they want to implement this tax, and for what purposes. In the event that expansion of the resort tax fails to receive legislative support, the Chamber supports local option taxing authority. Either expansion of the resort tax or local option taxing authority should have local voted authorization and purpose, a sunset provision, substantial property tax relief, and should be used primarily in the community in which it is generated. Accordingly, we need to have a draft piece of legislation that contains all of the elements listed above:

1. It will give the local government entity the power to implement a local option/resort tax it approved by a vote of the people.
2. The tax must be for a stated purpose, on specific goods and services and must contain a sunset provision.
3. There must be a portion of the tax collected that is returned to the property owners as property tax relief, probably in the 25% collected range.
4. A portion of the tax collected must be shared with rural government entities using some formula for calculation and distribution.

Statewide Sales Tax
The Chamber supports a statewide sales and use tax with the current constitutional cap of 4%, primarily as a replacement tax and as part of a broader tax reform plan.

Estate Tax
The Chamber supports finding an equitable compromise to the present federal estate tax legislation scheduled to sunset December 31, 2010.

Alternative Minimum Tax
The Chamber supports eliminating the federal Alternative Minimum Tax (AMT).

Fees
The Chamber believes fees must be tied to services rendered, not created as a replacement for lost taxing authority. Therefore, they should reflect the cost of providing that service. The Chamber also believes that powers that rest with local authorities, such as tax abatement should remain within the local jurisdiction and should not be assumed by the Montana Department of Revenue.

Property Taxes
The Chamber supports basing property taxes on assessed value, not acquisition value. We support continuing reduction and elimination of the business equipment (personal property) tax as a part of a statewide tax reform package.

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