Tax bills receive hearing

April 2, 2015

Members of House Ways and Means Committee heard from lobbyists on several pieces of proposed tax policy dealing with everything from sales and use tax exemption for construction to one-time exclusion of capital gains from sale of stock. 

House Study Bill 225 proposes changes to Iowa’s urban renewal law and the parameters around existing districts. The bill also proposes changes to future urban renewal areas or tax increment financing (TIF) projects. The bill would prohibit TIF use for public buildings and would also limit the time frame that TIFs could exist. The bill also includes reporting requirements for the amount of debt a community has, and finally, it requires all TIFs to eventually cease. The Iowa League of Cities, Professional Developers of Iowa, and Iowa Chamber Alliance are all registered opposed to the bill. ABI is currently registered undecided and the Iowa Farm Bureau is registered in favor of the legislation.

House Study Bill 226 seeks to clarify the existing Iowa Code chapter related to construction equipment used or purchased by contractors. The purpose of the bill is to make clear when excise tax is due on a piece of equipment and when, if at all, sales tax must be paid. During the subcommittee several questions were raised and at the end of the discussion it was unclear whether the bill clarified or eliminated the entire code section. The interested parties were going to discuss and the legislators will consider having another subcommittee to address the issue. HSB 226 is similar to House Study Bill 174 related to manufacturing as the interested parties are seeking clarity and streamlining to Iowa’s existing sales and use tax policy.

House File 443 has two purposes - to establish  the future repeal of the state board of tax review and to delineate how the board’s previous responsibilities will be assigned to the Director of Revenue and the Department of Revenue. If passed, the bill will take effect July 1, 2016. The subcommittee met on Wednesday and passed the bill. The bill passed the full House Ways and Means committee with amendment that repeals the sunset on the Property Assessment Appeals Board on Thursday.

House Study Bill 228 creates a narrow tax exemption for certain capital gains taxes. Individuals who have bought stock in an Iowa-based company that has been in operation for 10 years or more would be eligible for the exemption. Iowa’s capital gains tax is the fourth highest in the nation, so this exemption would incentivize Iowans who have invested in Iowa companies to keep their families and purchasing power in Iowa after they retire. The subcommittee voted to pass the bill and it will now go to the full House Ways and Means committee.