Look for an old battle to confront the “new” Republican-controlled Mississippi Legislature during the 2012 regular session as the state’s business community continues to push for either a repeal of the state’s inventory tax or an exemption from it.

An effort to persuade the Legislature to phase out the state’s inventory tax failed in 2009. Mississippi is one of only nine states to continue to levy an inventory tax, which is a property tax levied by cities and counties against a company’s inventory. The inventory tax is paid by businesses at the end of every calendar year, with the money going to local governments and schools.

Business groups call the tax “regressive.” Inventory tax is an annual ad valorem tax on business inventories (and also on other personal property such as business furniture, fixtures and equipment). The inventory tax is 15 percent of a county’s millage rate based on a taxpayer’s assessed values. The millage rates vary by county but based on the 2011 annual report of the state Department of Revenue there were $870.7 million worth of taxable inventories in the state’s business community that year.

The business community claims the state’s current inventory tax keeps it from being competitive with other states and keeps the state from attracting new businesses or growing existing ones against regional competition in states where no such tax is levied.

Those same business groups — including the influential Mississippi Economic Council and the Mississippi Manufacturers Association — further argue that inventory taxes are a form of possible double or triple taxation.

How? The “widget” in inventory is first taxed as inventory, and then used as a basis for a privilege tax license (the more “widgets” a company has, the more it pays) and then in some cases the “widget” is also subject to standard 7 percent sales tax.

Those valid arguments are good, solid business arguments to reduce or eliminate the inventory tax.

But the issue isn’t that simple. A recent analysis by the John C. Stennis Institute of Government at Mississippi State University requested by the Mississippi Association of Supervisors, Miss. Municipal League, Miss. Assn. of School Superintendents and the Miss. Assn. of School Boards projected that cities, counties and local school districts would lose approximately $162 million in county, municipal and school revenues if they inventory tax is eliminated.

The Stennis study forecast that counties would lose $56 million, cities would lose $33 million and that schools would lose $71.9 million. The state’s community colleges also derive a lesser amount of revenue from inventory taxes as well.

Schools, county governments and municipal governments are severely limited in their abilities to make up the loss of $162 million in revenues. If the inventory tax is eliminated, county and municipal governments and public school districts will be forced to make up $162 million in lost revenue from other taxpayers. What’s the most likely source? Higher property taxes and those higher taxes will likely come in the form of higher real estate taxes, higher car tags, and the like.

Eliminating the state’s inventory is a tax cut if and only if the Legislature makes provisions to hold county and municipal governments and school districts harmless from the impact of this business-friendly legislation. Otherwise, this isn’t a tax cut — it’s a tax swap from corporate taxpayers to individual taxpayers.