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Florida planning tax break for new plastics machinery

By: Gayle S. Putrich

May 30, 2013

Florida plastics processors, and other manufacturers, can now look forward to a tax break when buying new equipment purchases thanks to a new state law.

Signed into law by Republican Gov. Rick Scott as part of a larger economic development bill, facilities classified under NAICS codes 31, 32 or 33 can purchase industrial machinery and equipment without paying the state’s 6 percent sales tax, starting April 30, 2014.

The equipment must have a depreciable life of at least three years, be used for processes that account for at least 50 percent of the facility’s operations and “be integral in the production of the product for sale.”

With the industry finally feeling a real rebound from the economic downturn that started in 2008, plastics manufacturers in Florida are already looking forward to a little bit a relief on planned purchases.

“We make capital purchases pretty regularly,” said Dale Givens, director of operations for King Plastics Corp., a manufacture of polymer sheets, slabs and large-scale shapes in North Port, Fla., “but this could accelerate some of those. And it will definitely make is a little easier.”

Tax abatements and other support will help keep the rebound moving forward and hopefully speed it up, he said, though the numbers are difficult to run.

“It’s hard to measure what the direct impact of a tax break like this is because eventually you’re going to have to buy new equipment no matter what. But this makes it more economical and maybe it means you can do it sooner or buy more expensive machines,” Givens said. “The goal is to put the new equipment in so you can hire more people, create more jobs and at that I think [the tax break] will be successful.”

With the new law, Florida — at least temporarily — joins most of the rest of the country, as only nine states now tax manufacturing equipment purchases: Arizona, California, Hawaii, Kentucky, Minnesota, Nevada, New Mexico, North Dakota, South Dakota.

California, however, has two bills in play that would exempt purchasers of equipment and machinery from the 6.5 percent state sales tax.  California Gov. Jerry Brown (D), in his May Revised Budget update, proposed a statewide sales tax exemption on the purchase of manufacturing or biotech research and development equipment, which the Society of the Plastics Industry Inc. called encouraging.

Florida’s new tax break is set to sunset in April 2017, but there is some concern that it could disappear sooner due to a legislative loophole in the state constitution that requires a two-thirds vote to pass a measure affecting local tax revenues; the bill passed on a on a 68-48 vote, leaving the door open for objection from the Democratic minority.