ELKHART -- When Bill Waltz, director of taxation and public finance with the Indiana Chamber of Commerce, hears critics suggest the business sector isn't carrying its weight in taxes, he begs to differ.
"They're paying more than their fair share," Waltz said. Addressing the Lions Club here Wednesday, he noted that business property represents just 37 percent of Indiana's total property assessments, but that the sector pays more than half of all property taxes in the state.
Thus, with reform of the state's property tax system likely to be the key issue in the coming legislative session, he wants to make sure the business sector isn't unduly burdened by any change. If such shifting occurs, he warns, some Indiana businesses could forego expansion to compensate for any hike in their taxes or even move from the state.
More particularly, he zeroed in on Gov. Mitch Daniels' plan to overhaul the property tax system, noting several areas of concern for the chamber:
* The proposed increase in the sales tax from 6 to 7 percent -- a key element of the governor's proposal -- has no corresponding offset to dilute the impact of such change to the business sector, as with homeowners. Such an increase, meant to reduce dependence on property taxes, would generate $928 million per year, with $275 million coming from purchases by the business sector.
* The business sector would be tapped to make up for a proposed hike in the homestead exemption, which would reduce the taxable value of owner-occupied homes, Waltz fears. The existing exemption would reduce the taxable value of a $100,000 home to $45,000 while the governor's proposal would cut that even more, to $35,750.
* Proposed caps in allowable property taxes on individual pieces of real estate are unfairly beneficial to homeowners, he suggested, violating clauses of the Indiana Constitution requiring uniform treatment of taxpayers. The governor's plan would cap the taxes due on an individual home in any given year to 1 percent of its assessed valuation. The number would be 2 percent for rental properties and 3 percent for businesses, farms and utilities.
Despite it all, the Indiana chamber "is generally supportive" of nine-tenths of the governor's proposal, said Cameron Carter, another chamber official who participated in Wednesday's presentation. And Waltz said there's still plenty of time to formulate a final proposal.
"Maybe everything's not just perfect," Waltz said. "There's still some time to refine and make adjustments."
The governor's proposal, aimed at reducing the property load on homeowners, stems from popular outrage over increases in many homeowners' taxes. The average tax bill for Indiana homeowners increased 24 percent this year compared to 2006, in part because of the elimination of a tax on business inventory.