KXLF

Posted: Apr 13, 2010 2:26 PM
Updated: Apr 14, 2010 1:14 PM

Unlike most of the country, Montanans do not have to pay an additional tax for selling or inheriting property. One group is working to keep it that way.

The Montana Coalition to Prevent Double Taxation is behind CI-105, a proposed constitutional amendment to prohibit the state Legislature from imposing transfer taxes. A real estate transfer tax or RETT, is a tax that applied whenever a piece of property changes ownership. It generally taxes real property like homes, land, farms, ranches and small businesses.

"We pay property taxes every year to our state and local government, and a RETT would require us to pay another tax on the same property when we sell," said Chuck Denowh, the director of the Coalition to Prevent Double Taxation.

Over the past decade, RETT proposals have been introduced in the Legislature nine times and all have failed. Most of the proposals called for a transfer tax rate of 1% of the sales price. In other words, a $150,000 home would be taxed an additional $1,500 when it is sold or inherited.

Denowh says passing the constitutional amendment would put the issue to rest once and for all. "We already pay enough in property taxes. We shouldn't allow politicans in Helena to tax the same piece of property twice."

But some are calling CI-105 misleading and anti-government. "The term 'double taxation' isn't accurate because there's nothing double about it. The tax doesn't exist," said Eric Feaver, President of MEA-MFT.

According to Feaver, a 1% transfer tax on the sales price could raise $28 million dollars annually statewide. "The potential fiscal impact is big. It wipes away a potential source of revenue to secure goods and services that citizens of the state need. Why would we slice away our ability to tax and fee?" he asked.

The MEA-MFT is an education labor union with over 18,000 members. Feaver said the organization is generally against proposals that are anti-government and anti-tax. "We're not fond of ballot-issue government, period. It seems silly to prohibit this tax and not that kind, to pick and choose," said Feaver.

To make it on the ballot in November, supporters of the constitutional amendment must gather roughly 50,000 signatures from Montana voters by June 18. Denowh is confident they will be able to achieve that number and says he believes close to two-thirds of property owners will sign up.

The coalition behind CI-105 is made up of many groups including the Montana Association of Realtors, Montana Taxpayers Association, Montana Stockgrowers Association, the Montana Building Industry Association, and the Montana Manufactured Housing Association.

Currently, 37 states impose a real estate transfer tax. In 2008, Arizona passed a similar constitutional amendment to prohibit it.