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Show Property tax exemption ruled unconstitutional r -r system where residential property would receive preferential treatment treat-ment over other types of pioperty, and where locally assessed property would receive exemptions not given to centrally assessed and personal property. Centrally assessed property which is assessed by the State Tax Commission includes all mines, utilities, and railroads in the state, and accounts for approximately 25 percent of all valuation. Locally assessed property includes in-cludes aU residential and commercial commer-cial property assessed by the county assessor. The 20-percent exemption for "intangibles" was supposed to account ac-count for real estate fees, closing The Utah Supreme Court has ruled rul-ed that the 20-percent property tax exemption for "intangibles is unconstitutional un-constitutional as applied to Amax Magnesium Corporation, which filed fil-ed suit claiming it had been unfairly taxed The Court, in a unanimous decision, deci-sion, ruled that the practice of taxing tax-ing only 80 percent of the market value of locally assessed property while taxing 100 percent of the market value of centrally assessed property is unconstitutional. The ruling has the potential of affecting all property taxpayers in Utah by reshuffling taxes from some classes of property to others. The Taxpayers Association, more than ten years ago, opposed plans to move to a property ciassificaric costs, and other expenses which were not realized by the seller of real estate. Since the 20-percent exemption was not given to state assessed property, these corporations appealed appeal-ed their taxes through the courts. One year ago, a Federal court ruled that railroads must be assessed at the same level as locally assessed commercial property. Since then, virtually all centrally assessed property owners have appealed ap-pealed their property values based on equal taxation grounds. The Utah Supreme Court was careful to note its decision applied only to Amax, and that other changes would have to be decided on a case-by-case basis. The Court held mat when the same methods to determine valuation are applied to both centrally assessed property and locally assessed property, they must be treated equally in terms of valuation. valua-tion. Following the railroad ruling, the Legislature had the chance to address ad-dress the issue, but it was felt by most legislators there was nothing to gain by getting involved in the issue. The Legislature may address the issue in the 1991 session, by granting gran-ting the same 20-percent exemption to all centrally assessed properties. This would mean a $31 million decrease in property tax revenues unless tax rates were increased accordingly. ac-cordingly. The Legislature also could remove the 20-percent exemption for all property taxpayers and reduce property tax rates. However, these alternatives would result in a shift of property taxes from centrally central-ly assessed property to other property proper-ty taxpayers. The tax shift would be greatest in counties with a large proportion of centrally assessed property such as Summit, Millard, Emery, Duchesne, Uintah and San Juan. The Taxpayers Association is concerned that if the Legislature addresses the decision, all of the shifted taxes may be imposed on locally assessed businesses. Some legislators are examining the option of expanding the present 25-percent residential exemption to 45 percent allowed by the Utah Constitution. This would shield residences from the tax shift, while forcing locally assessed commercial property to pay the cost of the Legislature's mistake. |