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Timber Taxation 



Forest lands in Montana are taxed under a statewide property tax system 

 instituted in 1963. Tax assessments are derived from a timberland classi- 

 fication system and timber valuation schedule. The classification system, 

 developed in 1961 (no update), incorporates parameters of: 1) species; 

 2) stand size; 3) stocking, and; 4) access and topography. Valuation 

 schedules are calculated differently for timber east or west of the 

 Continental Divide. These schedules were updated in 1972 and will be 

 updated again in 1978 to reflect present day market prices and operational 

 costs of timber harvesting. In addition, all commercial forestland is 

 also taxed as grazing land (John Clark, pers. conin., 12/77). 



Such tax structures can influence management of forestland. Many land- 

 owners have reduced their land's assessment value by selling the timber 

 and/or deferring reforestation. This situation is reducing the state's 

 timber base, but is not directly responsible for water quality problems. 

 However, combined with the poor utilization of public assistance programs 

 by landowners and the resultant lack of BMP's in use on private lands, the 

 tax structures do encourage practices which may negatively affect w?.ter 

 quality. The following actions are necessary to alleviate this situation: 

 1) restructuring of taxation policies to encourage management for timber, 

 particularly reforestation; 2) active forestry assistance programs 

 that reach forest landowners with information and technical advise for 

 employing BMP's in forest management programs; 3) tax incentives for 

 encouraging use of BMP's in forestland management. 



Recent tax measures in the state legislature reflect an increasing awareness 

 of tax incentives as a potential method of reducing undesirable land 



