New law a plus for Florida economy

Florida recently took a big step forward in enhancing incentives for manufacturing businesses to relocate to or expand in the state. Gov. Rick Scott signed a bill into law that will eliminate sales tax on the purchase of manufacturing equipment when it goes into effect April 30, 2014.

Under predecessor laws, in order to receive an exemption for sales/use tax on the purchase of manufacturing equipment, a company had to be either (1) opening a new plant; or (2) expanding and able to show a specified increase in production resultingfrom the addition of the equipment. Prior to Jan. 1, 2013, companies in the latter category had to increase production by at least 10 percent. Since then, this requirement has dropped to 5 percent.

In a slow economy in which production is flat, many companies are not able to meet the current required increase in production and therefore are unable to qualify for the exemption. The new law will eliminate the requirement to meet a production increase threshold as a condition of receiving the exemption, which will greatly expand the scope of the exemption and allow more manufacturers to qualify.

Tax implications, including the cost of sales/use tax on plant equipment, can be a major consideration in a company’s decision to relocate or expand.

A majority of states already have tax laws that are more favorable to the manufacturing industry than Florida’s traditionally have been. This new law should go a long way toward helping Florida become more competitive in attracting manufacturing companies and growing the industry in the state, and it comes at an opportune time as the Panama Canal is expanding.

Also increasing the state’s competiveness is the fact that this law applies broadly to manufacturers in a wide range of subsectors. Businesses that fall under codes 31, 32 and 33 in the North American Industry Classification System (NAICS) are eligible for the sales/use tax exemption. These code classifications encompass virtually all forms of manufacturing, including food, apparel, wood, paper, printing, chemical, pharmaceutical, plastic, rubber, metal, transportation and furniture.

For a company to claim an exemption for a given manufacturing location, the primary activity (more than 50 percent) at the particular plant location must fall under one of the qualifying NAICS codes.

In addition the new law, Florida has several other sales/use tax exemptions that are beneficial to manufacturers. These include:

• An exemption for parts and labor to repair manufacturing equipment;

• An exemption for electric and steam energy used to power manufacturing equipment;

• An exemption for boiler fuels used to power manufacturing equipment;

• An exemption for equipment used predominately in research and development.

These exemptions, together with the new law, combine to make an attractive bundle of incentives for those in the manufacturing sector. For manufacturers considering opening new plants or expanding existing plants, Florida’s sales/use tax incentives as enhanced by the new law could very well translate into a decision to choose Florida over other states .

It appears that Florida has learned a valuable lesson — it takes more than just a warm climate to attract certain industries. Let’s hope the state Legislature will extend the new law in three years when it is initially scheduled to sunset, and that this does in fact reflect a new philosophy, commitment and priority on attracting manufacturing to Florida.

Dan Wagner is an associate tax principal in Kaufman, Rossin’s State and Local Tax (SALT) practice.

Read more Other Views stories from the Miami Herald

Tony Lesesne


    Tony Lesesne: Overkill, and an apology

    Yes, it happens in South Florida, too — and it shouldn’t. Black men pulled over, needlessly hassled by police officers who give the rest of their colleagues a bad name, who make no distinction when a suspect has no other description than ‘black male,’ who harass residents because they can. A North Miami Beach officer pulls over a black man in a suit and tie — and behind the wheel of an Audi that simply had to be stolen, right? In another Miami-Dade city, an officer demands that an African-American man installing a vegetable garden justify why he has a shovel and seedlings. Detained for possession of cilantro? Here are five South Floridians who tell of their experiences in this community and beyond, years ago, and all too recently.

Delrish Moss


    Delrish Moss: Out after dark

    “I was walking up Seventh Avenue, just shy of 14th street. I was about 17 and going home from my job. I worked at Biscayne Federal Bank after school. The bank had a kitchen, and I washed the dishes. A police officer gets out of his car. He didn’t say anything. He came up and pushed me against a wall, frisked me, then asked what I was doing walking over here after dark. Then he got into his car and left. I never got a chance to respond. I remember standing there feeling like my dignity had been taken with no explanation. I would have felt better about that incident had I gotten some sort of dialogue. I had not had any encounters with police.


    Bill Diggs: Hurt officer’s feelings

    “I’m the first generation in my family to go to college, and if I wanted to do nothing else, I wanted to make my mom happy. I was living for my parents, I wanted to be that guy, I wanted to go to work and not have to put on steel-toe boots. And here I am in Atlanta, I have finally grown to a particular level of affluence. I wasn’t making a lot of money, but I was a college kid, wearing a suit, driving a nice BMW going to work everyday. Can’t beat that. I would leave my house, drive up Highway 78, the Stone Mountain area, grab some coffee, go to work. So on this particular morning, there’s a cop who’s rustling up this homeless guy outside the gas station where I was filling up. I’m shaking my head, the cop looks at me. This homeless guy is there every morning. I get in my car and on to the expressway. The police officer comes shooting up behind me. I doing 65, 70. He gets up behind me, I notice he’s following me. I get in one lane, he gets in the lane, I get in another lane, he gets in that lane. He finally flips his lights on, he comes up to the car. I’ve been pulled over for speeding before, I know the drill. Got my hands up here, don’t want to get shot, and I think he’s going to say what I’ve heard before: ‘License and registration, please.’ He says ‘Get out of the car!’ and he reaches in and grabs me by my shirt. He says, ‘So you’re a smart ass, huh?’ Finally he says, ‘License and registration.’ I tell him it’s in the car. He says, ‘Get it for me!’ He goes back to his car, comes back and asks, ‘So where did you get the car from?’ I say ‘It’s a friend of mine’s.” He says, ‘Is it stolen? What are you doing driving your friend’s car?’ I finally asked, ‘Is there a reason you stopped me? You followed me, what’s up, man?’ He says, ‘I’m going to let you go with a warning, but if you see me doing what I’ve got to do for my job, don’t you ever f---ing worry about it.”

Miami Herald

Join the

The Miami Herald is pleased to provide this opportunity to share information, experiences and observations about what's in the news. Some of the comments may be reprinted elsewhere on the site or in the newspaper. We encourage lively, open debate on the issues of the day, and ask that you refrain from profanity, hate speech, personal comments and remarks that are off point. Thank you for taking the time to offer your thoughts.

The Miami Herald uses Facebook's commenting system. You need to log in with a Facebook account in order to comment. If you have questions about commenting with your Facebook account, click here.

Have a news tip? You can send it anonymously. Click here to send us your tip - or - consider joining the Public Insight Network and become a source for The Miami Herald and el Nuevo Herald.

Hide Comments

This affects comments on all stories.

Cancel OK

  • Marketplace

Today's Circulars

  • Quick Job Search

Enter Keyword(s) Enter City Select a State Select a Category