Nevertheless, it indicates that House Bill 376 would address a situation in which a landowner managed to avoid the payment of additional taxes, penalty, and interest. It hence could result in an increase in the taxable property values for units of local government, and a decrease in the costs to the Foundation School Fund to the State.

House Bill 376 aims at closing a loophole that currently allows some property owners not to pay the additional tax or "rollback" tax due when a change of use of land from agricultural to non-agricultural occurs.

House Bill 376 tries to correct the law so that some taxpayers cannot escape the tax while others are paying at the same time. But it eludes what might well be the reason some property owners try to take advantage of the loophole: several other problems with the additional tax itself. The "rollback" tax, equivalent to a sanction for changing the use of land from agricultural to non agricultural, may keep on encouraging people to try and "find" a loophole to avoid paying it.

That owners are treated differently regarding the appraisal of land is understandable. That taxing units require back taxes because the use of the land is changed, while owners already pay higher taxes when this change occurs, and the land was appropriately used for agricultural production during the period for which the back taxes are required makes little sense. The exemption for a certain category of owners makes it all the more unfair for those who are required to pay the "rollback" tax.

Although we commend House Bill 376 for working within the law as it is today, it is not directed at the core of the problem. It tries to enforce a request on retroactive taxes based on a change of use of land, and hence appraisal value of the land, that is not retroactive. Property owners that knowingly used this loophole to try and avoid this tax might well wait five years and one day to regain possession of the land. When this happens, is the law going to be changed again so that the penalty can apply in any case in which a property owner regain possession and has avoided the additional tax?

Low and consistent taxes for everyone tend to encourage people to comply with the law instead of trying to find loopholes to escape its sanction. The rollback tax for the change of use of land is an unfair tax that invites people to seek out and find loopholes to exploit. Trying to close a loophole without addressing the larger issues inherent in the rollback tax may simply encourage the exploitation of new loopholes and kick the can down the road for a future legislature to address.

Ultimately we recognize that this legislation does close a loophole to make the current tax scheme apply more equally to all property owners benefiting from the agricultural exemption. Bearing this in mind we are neutral on SB 376 and urge the legislature to consider substantively addressing the inherent problems with the rollback tax in the future.