SACRAMENTO, Calif. (KTXL) — California manufacturers want the state to remove taxes on the purchase of new equipment, saying such taxes are hampering the industry.
It comes as manufacturers aim to modernize production and make it more efficient as supply chain issues continue to impact the country and the world.
“It’s simple. We didn’t come up with a complicated formula. We just said, ‘If you want to buy something, please go buy it. You will be exempt from sales tax so that you can buy more and create more jobs,” said Lance Hastings, CEO of the California Manufacturers and Technology Association.
Hastings said California taxes both production equipment and product at some of the highest rates in the country. In some cases, it reaches up to 10.75%.
Experts note that as innovative as California is, the state only attracts 1% of new manufacturing investment in the United States due to financial burdens.
“We help machines, processes and robots move up and down,” said Pamela Kan.
Kan is the owner of Bishop-Wisecarver, a small manufacturer in the Bay Area. She notes that most manufacturers in California are small to medium-sized.
“Wipe the sales tax on equipment for small and medium manufacturers. It’s a huge competitive win for us. I compete with competitors in lower cost states. Efficiency is key for me. If I can produce my products more efficiently, staying on top of technology and using the latest equipment, that keeps me in California and allows my prices to be competitive,” Kan explained.
Manufacturers said the tax cut could give companies more buying power to upgrade their equipment to be more efficient and up-to-date. They also said California industry could grow even further, expanding the workforce and potentially contributing billions more to the state’s economy.
“We are the first producing state in the country. We have the most employees, 1.3 million, and our proposal, based on an economic study, would increase the manufacturing job base in California by more than 10%,” Hastings said. “So that would create new jobs, and every manufacturing job supports 2 1/2 other jobs.”
“When we don’t have the capacity to do what this state needs, it really puts the state at risk for its future growth,” Kan said.
Industry leaders hope lawmakers will approve their request, either through state budget negotiations this spring or through the 1951 Assembly Bill.
The bill has no registered opposition.
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