SALT Report 1702 – On August 29, 2012 the California Senate approved a bill that would extend the sales and use tax exemptions offered by the California Alternative Energy and Advanced Transportation Financing Authority (CAEATFA) to advanced manufacturers. Currently, CAEATFA exemptions are limited to those facilities that use alternative energy sources and technologies and to facilities that develop and commercialize advanced transportation technologies in an effort to conserve energy and reduce air pollution.
However, Senate Bill 1128, authored by Senator Alex Padilla (D-Pacoima), would expand CAEATFA’s benefits to the following industries:
- Medical device manufacturing,
- Fabricated metals, and
The exemption would also be extended to the technologies necessary in the advanced manufacturing sector such as, micro and nano electronics, semiconductors, advanced materials, integrated computational materials engineering, additive manufacturing, and industrial biotechnology.
If signed by the Governor, the sales tax exemption would increase California’s competitive business edge as it is currently one of three states that tax purchases of manufacturing equipment. Senator Padilla feels the tax undermines the state’s ability to attract manufacturing businesses and create new jobs in the state. He says, “California is uniquely positioned to benefit from high tech jobs coming back to the United States. In 2010 nearly half of all research and development venture capital invested in the U.S. was invested in California. Being a leader in R&D is great, but only half of the equation. We need to make California attractive to the manufacturing sector as well.”
The CAEATFA board estimates that the current exemption has generated $10 million dollars in private investment for every $1 million dollars the program has allocated. For California, this has resulted in nearly $1 billion dollars in private investments and more than 7,300 jobs. Therefore, expanding the CAEATFA program to advanced manufacturers would help California attract additional businesses and make the state a competitive force in the manufacturing jobs sector.
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