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Coal value added facilities-tax exemptions. |
10LSO-0174.C1 |
This bill amends a sales and use tax exemption on the sale or purchase of equipment used to construct a new coal gasification or coal liquefaction facility to now include oxy-combustion or similar advanced coal facilities.
It is estimated that construction of an oxy-combustion coal facility with a rated maximum capacity of 150 megawatt hours of transmission would cost $800 million. It is assumed that 60% of construction costs would relate to the sale or purchase of materials and equipment and 40% would be non-taxable labor.
Based on the assumptions described above for a single project, and a statewide average sales tax rate is 5.24 percent, this exemption would result in a total decrease in sales and use tax of roughly $25.2 million. It is assumed this decrease would be allocated 53% General Fund ($13.356 million) and 47% local government ($11.844 million). Based on the estimated timeframe for an oxy-combustion project that would qualify, this exemption could begin to impact sales and use tax revenues in mid-2013 (FY 2014).
Please note that this type of construction project would also qualify the county where the project is located to impact assistance funding which will impact General Fund revenue. The amount of this impact would be dependent on the scope of the project.
Prepared by: Dean Temte, LSO Phone: 777-7881
(Information provided by Rob Hurless, Governor’s Office; 777-8521:
Dan Noble, Dept. of Revenue; 777-5220)