Opinion ID: 835098
Heading Depth: 3
Heading Rank: 2

Heading: The legislative history of ORS 307.400

Text: The department next asserts that the historical context and legislative history of ORS 307.400 reveal that the legislature intended to provide relief from the personal property tax only as to locally assessed, not centrally assessed, business inventory. The legislature first provided a partial tax exemption for business inventory in 1965, under the Inventory Tax Relief Act, codified at former ORS 310.605 to 310.625 (1965), repealed by Or. Laws 1969, ch. 612, § 5. See Or. Laws 1965, ch. 604, §§ 1-12 (HB 1498). The Inventory Relief Act reduced the personal property tax on inventory based on a percentage calculation. Former ORS 310.605. The major purposes of phasing out the taxation of inventory were to create new businesses in Oregon, prevent employee cutbacks, and reduce the seasonal aspect of Oregon's economy. [13] Tape Recording, House Committee on Taxation, HB 1498, Mar. 16, 1965, Tape 16, Side 1 (statement of Sen. Victor Atiyeh). The legislature was also concerned with how the personal property tax on inventory affected Oregon businesses' ability to compete in the market, because other states had a relatively small tax on inventory. See Minutes, Senate Committee on Taxation, Apr. 26, 1965, 3, 7. In 1969, the legislature repealed the 1965 Inventory Tax Relief Act, Or. Laws 1969, ch. 612, § 5, and enacted a permanent tax reduction program for the personal property tax imposed on inventory, codified at former ORS 310.608 (1969), renumbered as ORS 307.400 (1981). Or. Laws 1969, ch. 612, § 1, 2 (HB 1214). Former ORS 310.608(1) provided an exemption for the taxpayer's inventory, one that increased at a rate of five percent per year for four years, and ten percent per year thereafter. A complete exemption was enacted in 1979. Or. Laws 1979, ch. 692, § 5. The statute was renumbered as ORS 307.400 in 1981. During hearings on the 1969 bill, the legislature again heard concerns from industry regarding Oregon's seasonal economy. Minutes, Senate Taxation Committee, May 13, 1969, 2 (statement of Douglas Heider, Retail Council Director of Associated Oregon Industries). The legislature expressed concern that Oregon was falling behind other western states in inventory tax relief and was continuing to lack competitiveness in the market. Id. (statement of Rep Jason Boe). The department cites portions of the 1965 Inventory Tax Relief Act, as well as several statutes that predated that act, in support of its contention that the legislature never intended for the business inventory exemption to benefit centrally assessed taxpayers. [14] The department's basic theory is that centrally assessed property was not subject to the locally assessed ad valorem tax on inventory (emphasis in original) and, thus, was not intended to benefit from the exemption. We find nothing in either the 1965 Inventory Tax Relief Act or the statutes predating that act that leads us to conclude either that a separate tax on inventory existed or that it applied only to locally assessed taxpayers. The property tax imposed on inventory was the property tax on tangible personal property  and that tax applied generally. See ORS 307.030(1) (1965) ([a]ll    tangible personal property    shall be subject to assessment and taxation). Further, the main purpose behind the 1965 Inventory Tax Relief Act convinces us that the legislature wanted to reduce  and ultimately exempt  the personal property tax on inventory for all Oregon businesses that held inventory for sale. As noted, the legislature was concerned with the seasonal aspect of Oregon businesses holding inventory for sale, which affected their ability to compete in the market because other states were not taxing inventory. Considering the purpose behind the legislation, we see no reason why a centrally assessed company holding inventory for sale  and thus, suffering from similar seasonal hardships  would not have been an equal target of the 1965 and 1969 legislation. [15] Accordingly, the legislative history provides no basis to conclude that the legislature intended to exclude centrally assessed taxpayers either from the phasing out of personal property tax imposed on inventory, or from its ultimate exemption. [16]