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2005 General Session
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Tax Exemptions - Background Tax Exemptions - Background |
Wyoming collects a statewide sales and use tax of 4% on retail sales of tangible personal property and many other products and activities, defined in state statute. Wyoming’s statutes also provide a number of specific exemptions to the state sales tax.
HB 315 would have provided a sales tax exemption for equipment used in new electrical generating power plants, and for electrical transmission lines. This large new tax exemption was justified as an economic incentive for companies building new power plants and electrical transmission.
The Legislative Service Office was unable to estimate the fiscal impact of this proposed tax exemption, because the Wyoming Department of Revenue could not provide data on the cost of construction of power plants in Wyoming.
The Equality State Policy Center, looking at power company websites, discovered current estimated costs of new power plants in other states that are comparable to power plants proposed for construction in Wyoming. By roughly estimating the amount of construction cost that would be tax exempt under HB 315, the ESPC concluded that from $15 to $40 million in tax revenue could be lost for power plants ranging in size from 500 MW to 1500 MW. Recognizing that thorough, detailed analysis would be required to arrive at a realistic estimate of the actual amount of revenue at risk, the ESPC used their superficial investigation to demonstrate that the losses would certainly amount to many millions of dollars, and strongly advocated that the state take the time to learn what level of revenue loss they were proposing before enacting such a broad tax exemption.
Supporters of HB 315 staunchly maintained that energy companies needed the economic incentive of paying less in taxes to induce them to build new power plants and electrical transmission lines in Wyoming. They worried that if Wyoming did not offer these tax breaks, the companies would go elsewhere to build new power plants.
Opponents noted that two power companies have already committed to build new power plants in Wyoming and others are being discussed, and that tax incentives are useful for economic development only if they induce activity that would occur in their absence. Opponents maintained this bill would not lead to additional economic development, and that there was no justification for losing millions of tax dollars,
The House Revenue Committee amended HB 315 to require annual reports that summarize employment, wage and tax histories for companies that take advantage of the new tax break. Thus amended, the Committee unanimously passed HB 315. The bill died on general file in the House without a vote by the House Committee of the Whole.