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BOISE, Idaho (AP) — An aggressive three-part proposal to eliminate sales tax on groceries, lower income taxes on Idaho's top earners while hiking the fuels tax by 7 cents per gallon has passed the Idaho House.
House lawmakers voted 53-17 Monday to send the bill to the Senate for approval.
Majority Leader Mike Moyle says the bill will boost Idaho's economy by attracting more businesses and providing families with more money they would have spent on grocery taxes.
The plan — backed by House Republican leaders — was introduced late into the legislative session as one of the final attempts to offer a way to attempt chipping away at Idaho's $262 million annual transportation funding shortfall while also pairing it with a compatible tax cut.
Along with the tax proposal, House lawmakers also approved two piecemeal bills Monday that would raise $46 million in transportation funds.
"I understand we want to protect and keep the revenue of Idaho," Moyle said. "This does protect and it makes sure we can live up to our commitments to the career ladder."
Democratic representatives countered by questioning the constitutionality of the bill and arguing that the plan will hurt Idaho's dwindling middle-class.
Rep. Mark Nye, D-Pocatello, pointed to sections of Idaho law that prohibited grouping too many subjects under one bill.
Meanwhile, Rep. John McCrostie, D-Boise, warned that the plan would take away money from the state's general funds at the same time Idaho Statehouse had just passed a $125 million plan to increase teacher pay over the next five years.
If lawmakers don't fund the teacher pay plan, McCrostie said he would be forced to resign from his position as a teacher.
Under the tax plan, Idahoans in the top income tax bracket would see their rate drop from 7.4 percent to 6.7 percent. The plan would also remove the grocery sales tax credit. Doing so would generate $65 million annually in transportation funding because of the higher fuels taxes.
However, how the plan will impact Idahoans has drawn conflicting reports from various organizations. According to the Idaho Center for Fiscal Policy, taxpayers in the bottom 80 percent of the income distribution will pay more.
Meanwhile, the free-market think tank Idaho Freedom Foundation issued a statement claiming that a family of four with a $40,000 annual income would see no increase to their income tax, and that the elimination of the grocery sales tax would offset the fuels tax boost.
"This bill ... moves the ball so Idaho can become more competitive," Moyle said. "I know it's not easy. But we want to move in the right direction and try to make Idaho the place people want to go."
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