A bill that would allow Montana towns and cities the option to implement a local sales tax has resurfaced in the Montana Legislature.
Rep. Dave Fern, D-Whitefish, sponsored House Bill 187, and introduced it to members of the House Taxation Committee on Wednesday, Jan. 26. Fern carried a similar bill in the 2019 Legislative Session that would have allowed for a local luxury sales tax, but it died in committee.
The tax would not be allowed to exceed 2% and could not last longer than 20 years. The bill also includes a measure to allow tax rebates to residents of the municipality that implements the income tax — designed so that out-of-state travelers bear the brunt of the tax.
Proponents of the bill said it’s time to ease and diversify the tax burden on Montanans, and that HB 187 would increase local control of revenues.
Darryl James, the executive director of the Montana Infrastructure Coalition, said the bill would help Montana property tax payers who are “crying out for help,” and suggested that visitors to the state can carry more of the load.
“We simply need another tool to capture what’s really a user fee from those who, today, really have a free ride,” James said.
Opponents of the bill included the Montana Taxpayers Association, the Montana Budget and Policy Center, and others who said the sales tax would still weigh heavier on residents than tourists.
SJ Howell, the executive director of Montana Women Vote, said the bill would hurt low-income renters especially hard, due to the bill not mandating property tax relief.
“We’re really deeply concerned that low-income families in these communities would be further squeezed by this bill and not, in fact, find tax relief,” Howell said.
Rep. Mary Ann Dunwell, D-Helena, expressed frustration that the local sales tax bill has continually died in committee.
“I want to support this bill, because I’m frankly at my wit’s end,” Dunwell said, citing numerous attempts in the past to pass other forms of residential property tax relief. “Local governments are experiencing a very real problem of tourists coming in, using and abusing services, and then leaving without paying their fair share.”
In his closing remarks, Fern seemed resigned to the fact that his latest version of the bill was likely to fail, but insisted that Montanans desperately need property tax reform.
“People love Montana, they love the amenities, and we have to do a better job to capitalize it,” Fern said.
MBPC is a nonprofit organization focused on providing credible and timely research and analysis on budget, tax, and economic issues that impact low- and moderate-income Montana families.