Should Montana be taxing required pollution control equipment?

Senator Bruce Tutvedt (R-Kalispell)

Senator Bruce Tutvedt (R-Kalispell)

Montana lawmakers may vote to remove the state’s tax on certain industrial pollution control equipment.

Senator Bruce Tutvedt (R-Kalispell) is sponsoring SB240, which removes taxes on new “air and water pollution control equipment” installed by companies like electric cooperatives, power plants and factories.

“I believe that we all want clean water and we all want clean air,” Tutvedt told the House Taxation Committee now considering his bill, “but I believe that we should not tax those things that actually deliver that.”
Ashgrove Cement’s Dick Johnson has been running the plant outside of Helena for the last 16 years. He says these required pollution control measures don’t positively contribute to a businesses bottom line. He says his plant has recently invested $14.5 million to build a new scrubber and baghouse. “This investment does not increase our production, it doesn’t increase our employment base, it doesn’t increase our quality…our operating costs are higher on top of the capital expense of $14.5 million for absolutely nothing but cleaner air.”
Montana Mining Association lobbyist Tom Hopgood has a problem with the government requiring companies have certain equipment and then taxing that very equipment. “We don’t believe that’s good public policy, we don’t believe it’s fair.”
Senator Tutvedt argues the government exempts other entities from taxation that are seen as a public good, like hospitals and churches.
Representative Tom Jacobson (D-Great Falls)

Representative Tom Jacobson (D-Great Falls)

Representative Tom Jacobson (D-Great Falls) has some reservations about the proposal. He argues pollution control equipment still adds value to a company “and therefore, based on our tax system there is a tax rate that should be attached to it.” However, Jacobson does say he understands the argument behind dropping the tax, saying “we should incentivize good behavior and penalize bad behavior.”  Jacobson says he prefers the idea of lowering the pollution control equipment tax–but not necessarily eliminating it.

Another bill by Representative Mike Miller (R-Helmville) does gradually lower the pollution control equipment from its current three percent. That bill is waiting in the Senate.

Legislative analysts say pollution control equipment in Montana brings in about $21 million a year in total tax revenue to state, county, and local governments. Senator Tutvedt’s bill would only remove taxes on equipment purchased on or after the first of the year–so it wouldn’t immediately touch that $21 million. However, that revenue would decrease over time as older equipment drops in value and companies upgrade.

Tutvedt’s bill passed it’s initial vote in the Senate 40-9. It’s final vote was caught up in the April 5th Senate Democratic Protest. That vote was 28-0. No one spoke against the bill in the House Taxation Committee hearing.