Text: HSB00652 Text: HSB00654 Text: HSB00600 - HSB00699 Text: HSB Index Bills and Amendments: General Index Bill History: General Index
PAG LIN 1 1 Section 1. Section 422.45, subsection 27, paragraph a, 1 2 Code Supplement 1995, is amended to read as follows: 1 3 a. The industrial machinery, equipment and computers shall 1 4 bedirectly and primarilyused by a service industry in 1 5 reducing the volume or toxicity or potential hazards of air 1 6 pollution, or in complying with the federal Clean Air Act, 42 1 7 U.S.C. } 7401 or in the manner described in section 428.20 in 1 8 processing tangible personal property or in research and 1 9 development of new products or processes of manufacturing, 1 10 refining, purifying, combining of different materials or 1 11 packing of meats to be used for the purpose of adding value to 1 12 products, or in processing or storage of data or information 1 13 by an insurance company, financial institution or commercial 1 14 enterprise, or in the recycling or reprocessing of waste 1 15 products. As used in this paragraph: 1 16 (1) "Service industry" includes businesses, such as, but 1 17 not limited to, dry cleaners, printers, and motor vehicle 1 18 repair shops. 1 19(1)(2) "Insurance company" means an insurer organized or 1 20 operating under chapters 508, 514, 515, 518, 519, 520 or 1 21 authorized to do business in Iowa as an insurer and having 1 22 fifty or more persons employed in this state excluding 1 23 licensed insurance agents. 1 24(2)(3) "Financialinstitutionsinstitution" means as 1 25 defined in section 527.2, subsection 9. 1 26(3)(4) "Commercial enterprise" includes businesses and 1 27 manufacturers conducted for profit and includes centers for 1 28 data processing services to insurance companies, financial 1 29 institutions, businesses and manufacturers but excludes 1 30 professions and occupations and nonprofit organizations. 1 31 Sec. 2. Section 427.1, subsection 32, unnumbered paragraph 1 32 8, Code Supplement 1995, is amended to read as follows: 1 33 For the purposes of this subsection "pollution-control 1 34 property" means personal property or improvements to real 1 35 property, or any portion thereof, usedprimarilyto control or 2 1 abate pollution of any air or water of this state or used 2 2 primarily to enhance the quality of any air or water of this 2 3 state and "recycling property" means personal property or 2 4 improvements to real property or any portion of the property, 2 5 used primarily in the manufacturing process and resulting 2 6 directly in the conversion of waste plastic, wastepaper 2 7 products, or waste paperboard, into new raw materials or 2 8 products composed primarily of recycled material. In the 2 9 event such property shall also serve other purposes or uses of 2 10 productive benefit to the owner of the property, only such 2 11 portion of the assessed valuation thereof as may reasonably be 2 12 calculated to be necessary for and devoted to the control or 2 13 abatement of pollution, to the enhancement of the quality of 2 14 the air or water of this state, or for recycling shall be 2 15 exempt from taxation under this subsection. 2 16 EXPLANATION 2 17 The bill provides a sales tax exemption for industrial 2 18 machinery, equipment and computers used by a service industry 2 19 in reducing air pollution or in complying with the federal 2 20 Clean Air Act, 42 U.S.C. } 7401. A service industry includes 2 21 businesses, such as, but not limited to, dry cleaners, 2 22 printers, and motor vehicle repair shops. The bill deletes 2 23 the terms "directly and primarily" from the usage requirement 2 24 of which industrial machinery, equipment and computers are 2 25 eligible for the sales tax exemption. 2 26 The bill expands the definition of pollution-control 2 27 equipment eligible for a property tax exemption by not 2 28 requiring that pollution-control equipment be used "primarily" 2 29 to control or abate air or water pollution. The term 2 30 "primarily" is deleted by the bill. 2 31 BACKGROUND STATEMENT 2 32 SUBMITTED BY THE AGENCY 2 33 The 1990 federal Clean Air Act amendments substantially 2 34 increased the regulatory requirements of small businesses. 2 35 Many of the small business persons are not technically and 3 1 financially prepared to comply with the complicated 3 2 regulations but must do so under fear of hefty fines for 3 3 violators. To remedy this problem, the Citizens' 3 4 Aide/Ombudsman office is proposing changes to both the 3 5 property tax exemption and the sales tax exemption. 3 6 First, under current property tax exemptions, a number of 3 7 businesses may not qualify for the exemption when they update 3 8 their processes which in turn enables them to meet air quality 3 9 standards. The primary purpose of the equipment is viewed as 3 10 a process change regardless of the fact that the technology 3 11 upgrade was the only means available to meet the air quality 3 12 standards. The word "primarily" needs to be changed as it is 3 13 subjective and not always applicable to the equipment or 3 14 processes which abate air pollution. 3 15 The second issue as the present system exists are the sales 3 16 tax exemption regulations which exclude a number of the 3 17 businesses affected by the federal Clean Air Act amendments. 3 18 Equipment purchases by a number of service businesses impacted 3 19 by the air emission standards, including dry cleaners, auto 3 20 body shops, and printers, would not be exempt because they are 3 21 not considered manufacturers, nor in many instances is the 3 22 equipment purchased primarily for pollution control but rather 3 23 to update their technology. The words "directly" and 3 24 "primarily" need to be changed as they are subjective and not 3 25 always applicable to the equipment/processes which abate air 3 26 pollution. In addition, exempt pollution control equipment 3 27 should include qualifying purchases made by service 3 28 industries. 3 29 It is economically viable to change the parameters of the 3 30 sales and property tax exemptions as the changes will help 3 31 only a select group of small businesses whose expenditures to 3 32 meet the federal Clean Air Act are not large, but are 3 33 significant for a business of their size. In addition, 3 34 broadening the sales and property tax exemption guidelines 3 35 should not have a significant impact on state budgets and will 4 1 lesson the burden of compliance. Changing the sales and 4 2 property tax exemption guidelines is attractive because it 4 3 does not require an appropriation. 4 4 LSB 3378DP 76 4 5 kah/jj/8.1
Text: HSB00652 Text: HSB00654 Text: HSB00600 - HSB00699 Text: HSB Index Bills and Amendments: General Index Bill History: General Index
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