DENVER—A proposal to exempt about 30,000 small businesses from a much maligned tax passed its first test at the state Capitol Tuesday.
The business personal property tax requires businesses to calculate the value of all their equipment, everything from tables and chairs to computers, and pay accordingly. Right now, businesses that have less than $2,500 in items are exempt but the bill would gradually increase that exemption to $7,000 by 2011.
State Rep. Joe Rice, D-Littleton, said that will cost the state about $630,000 and the state will have to find more money to make up for that revenue, which is used for schools.
Rice said so much time is wasted in preparing the tax forms that businesses freed from the tax should end up making more money. He showed a form prepared by a rental property owner who had to list the value of all the appliances in his units and ended up paying $60.45.
Big businesses with lots of expensive equipment, such as pipelines, contribute the most revenue. Rice said about 80 percent of the revenue brought in by the tax comes from about 5 percent of businesses.
The House Finance Committee voted to back the measure (House Bill 1225) and send it to the full House for a vote.
