06:06 PM CDT on Friday, May 12, 2006

By Brad Woodard / 11 News

Another major piece of school finance legislation is on its way to the governor’s desk, four days before the end of the special session.

The House bill, approved Friday afternoon, calls for an 11 percent property tax cut this year and gives teachers a $2,000 raise.

Another bill that awaits the governor’s signature is a new business tax largely designed to offset the proposed property tax cuts.

The measure has passed both the state house and the senate, but it’s not passing muster with some business owners.  

Fine Italian cuisine is always cooking in the kitchen at Arturo’s in Uptown Park.

But it’s a new business tax cooked up by the state legislature that worries owner Bill Sadler.

“I think the fact that it doesn’t take into account whether a business is profitable or not is not a good thing and it’s not fair,” he said.

“You can have a business that’s literally losing money, and yet they’ll still owe a tax under this proposed tax,” said Bob Martin, CPA, Martin and Associates, P.C.

Supporters of the new tax said it doesn’t take into account whether a business actually makes or loses money because that would make it an income tax, which is prohibited by the state constitution and can only be changed by a vote of the people.

The biggest losers under the plan are service oriented businesses from medical professionals to builders organized as limited partnerships instead of corporations.  Currently they don’t have to pay the state’s existing franchise tax at all, but they wouldn’t be exempt under the new plan.

It is estimated that only one in 16 businesses was paying the franchise tax.

The big winners, experts said, are big businesses with a lot of property, provided property taxes go down as proposed.