Colorado business owners looking to relocate or expand could get a reprieve from paying taxes on business personal property — if local governments allow it — the result of a bill passed Wednesday by legislators and headed for the governor's desk.
The bill, HB-1029, was passed by the state Senate and expands the right of local and county governments to exempt from the tax those businesses that want to grow or move into their jurisdictions.
Until now, governments could only give a business an exemption of up to 50 percent of the tax owed, a barrier to offering competitive incentives to companies wanting to move or expand, proponents said.
Businesses pay taxes on property they own if the total value is more than a minimum set by local government. In Larimer County, for example, the threshold is $5,500. Personal property includes machinery, equipment such as computers and furnishings.
"It encourages investments that will lead to near- and long-term economic recovery while respecting the authority of local governments," said bill sponsor Rep. Chris Holbert, R-Parker.
The amount of tax collected varies by county. The current 50 percent exemption from the tax over 10 years amounts to about $250,000 for a business with $1 million in equipment.
Raising the limit to 100 percent significantly increases the power to attract new businesses or bolster others to expand, proponents said.
"Now I can sit at the table when we're negotiating to get an incentive package for a business and make a stronger offer," Douglas County Commissioner Jill Repella said. "And 100 percent is a lot better message we send to a business that we really want them in our community."
Douglas County collects about $26 million a year in business personal property taxes, said Repella, who germinated the idea for the bill.
Though counties each would have to make up any tax shortfalls by raising collections elsewhere, the benefit is multi-tiered, Repella said.
By example, vacant land generates some of the lowest property taxes, an amount that increases exponentially when a business develops the property. Though that business might receive exemption from the business personal property tax in order to build there, those funds could be reinvested back into the operation.
"We'd still be collecting on the commercial property value rather than the vacant land," Repella said. "Plus there is the income tax on salaries, and the employment and the sales tax generated from whatever product might be produced."
David Migoya: 303-954-1506 or firstname.lastname@example.org