Indy Standard

As part of an initiative to stabilize Indiana's tax structure, a proposal has been introduced to replace the property tax with a 7% sales tax on services. This move aims to alleviate concerns about property tax burdens while providing a more adaptable revenue source for schools, local governments, and public services.

The fiscal impact analysis outlines significant changes intended to ensure fairness in the transition. A notable change is the inclusion of charter schools and Indiana Choice scholarships in funding allocations, ensuring all educational institutions receive necessary support for student learning.

Some school corporations may see reduced revenue under this plan; however, there is a strategy to offset lost referendum dollars. The plan involves implementing a flat fee based on the last year of property taxes to establish annual fees for referendums' remaining duration. An updated fiscal analysis will accompany the bill upon filing.

The proposal also includes provisions for Tax Increment Financing (TIF) debt repayment, ensuring new revenue does not hinder existing agreements or future growth. This measure aims to protect local investments and support public infrastructure projects.

Furthermore, funds distribution for civil units would be revised, separating fire protection from provider unit budgets. Fire services would receive dedicated funding unaffected by other revenue changes. The formula for distributing county and municipal funds would rely 75% on population and 25% on road miles, balancing urban and rural area needs based on their specific infrastructure requirements.

This shift from property tax to sales tax on services reflects economic changes by tapping into service-focused revenues instead of fluctuating property values. The proposal seeks feedback from local governments, school officials, and the public to refine this draft into a fair tax system that benefits Indiana long-term.

For further inquiries or information regarding this proposal or its fiscal impact analysis, contact details are provided at in.gov/h33 or 317-232-9751.