You have to wonder how much thought the business community has given to the impact of repealing the ad valorem tax on inventories.
Apparently, most businesses think the taxes on their business and other property will not increase and they will have less paperwork.
Those without inventories don’t think the repeal will have any impact on them.
While the paperwork for the business with inventories will be reduced, ALL businesses will pay more in taxes.
Bonded millages.
Currently, businesses with inventories are reimbursed by the state dollar-for-dollar for all local ad valorem property taxes paid on their inventories.
Lost in the debate appears to have been a discussion of those local millages that are bonded. That the case, when a taxing authority borrows money for capital expenditures and tie the repayment of the advanced funds from a particular property tax millage.
When millages are bonded the bond debentures (contracts) mandate that the millages pay for the debt service no matter what it takes.
If the existing tax base, minus inventories, is smaller the millages automatically roll-up without a vote of the taxing authority or the people.
Sticker shock.
Assuming the inventory tax repeal passes the lege and a subsequent vote of the people this fall, three’s going to be sticker shock in the business community.
Businesses and individuals will find their property tax bills will be higher than before their inventories were taxed.
When I get my property tax bill in 2016, I won’t be surprised – will you?
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