House approves $6.9M factory and farm tax break

Published on NewsOK Modified: February 25, 2013 at 7:34 pm •  Published: February 25, 2013
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JACKSON, Miss. (AP) — Factory operators, farmers and fishermen could stop paying sales taxes on electricity and fuel, under a state House proposal.

Representatives passed House Bill 844 by a 75-43 vote Monday to exempt those groups from a 1.5 percent sales tax on fuel used in producing those industries' products. It now goes to the Senate for more debate.

The tax break would cost more than $6.9 million a year, under projections from the state Department of Revenue.

It's the latest in a series of tax breaks that Republicans have pushed since winning control of both houses of the Legislature in 2011. House members are likely to consider a $45 million-a-year tax break to exempt manufacturers from the state's franchise tax soon. Last year, lawmakers slashed the state's levy on business inventory, potentially savings businesses tens of millions of dollars over time.

Supporters of Monday's bill say many other states don't tax energy use in production. They say Mississippi would be more attractive for new factories without the tax.

"Ultimately the goal is to let Mississippi grow its tax base by drawing industry in," said Rep. Mark Formby, R-Picayune.

The bill was pushed by the Mississippi Manufacturers Association.

Executive Director Jay Moon said 37 other states already exempt energy sales from taxation. He said his association, which is one of the capitol's most effective lobbyists for tax breaks, is trying to wipe out Mississippi taxes that factories don't pay in other states.

Opponents say the state can't afford to surrender tax revenues when it's struggling to fund existing programs.

"It's largely a function that we've got a lot of other needs that should be provided for before moving forward with these tax breaks," said Ed Sivak of the Mississippi Economic Policy Center. His liberal-leaning group argues that what's holding Mississippi back is not high taxes but money-starved education and health care systems.