Tuesday, May 27, 2014
Elimination of sales tax on manufacturing equipment and machinery provides large savings for Florida manufacturers
Manufacturing is a vital component to Florida’s continued economic turnaround. Recognizing the importance of the industry, Florida took a major step in helping manufacturers become more competitive through the elimination of sales tax on manufacturing machinery and equipment. The new law went into effect on April 30 and is expected to attract more businesses to the state, increase Florida-origin exports and create jobs and capital investment. It was an initiative that Governor Scott and the Florida Legislature rallied behind in the 2013 legislative session, and is expected to save manufacturers in Florida approximately $141 million annually.
SteriPack USA, a Lakeland-based manufacturer of sterile packaging for pharmaceuticals and medical supplies, applauded the legislation. Company president Tony Paolino said, “As a large part of SteriPack USA deals with manufacturing, the Governor’s tax cut to manufacturing eliminates the duplication of taxing throughout the buying and manufacturing process. This is incredibly beneficial to our bottom line and enables us to expand and become more economically profitable.”
The legislation fully eliminates an outdated five percent “productive output” requirement for businesses to receive a sales tax exemption on equipment. Until January 1, 2013, manufacturers were required to show proof of meeting a 10 percent productive output requirement. Governor Scott reduced this requirement to 5 percent in the 2012 legislative session.
With the elimination of the tax, Florida is poised to capitalize on the growing interest in making America a magnet for manufacturing production. The state ranks among the top 10 states for manufacturing establishments, with more than 18,000 companies employing more than 311,000 Floridians. Some of the state’s top manufactured products include plastics, computer and electronics parts, medical devices, transportation equipment, and fabricated metal used in aviation/aerospace.
To continue building a strong talent pipeline in Florida, dozens of academic and technical programs are offered throughout the state for manufacturing workforce competencies. As a right to work state, few locations can match Florida’s workforce size of more than 9 million.
Capitalizing on location, Florida serves as a global launchpad to the highly sought-after Latin American market, extending the reach for the state’s manufacturers. Florida’s multi-modal infrastructure, which supports more than 19 million residents and 95 million tourists annually, boasts 2,786 miles of rail lines, 20 commercial airports, 15 deep sea ports and 12,085 miles of highway used to facilitate the flow of goods and products. The state’s manufacturing industry is highly integrated with the global economy, with manufacturing accounting for 93 percent of Florida’s exports in 2012 and the growth is expected to continue.
Over the past three years, the state has allocated $642 million to be spent on dredging and deepening Port Miami and other Florida ports – making it easier for larger vessels to dock and ship goods through waterborne trade with Central and South America. Manufacturers will also be able to take advantage of the Panama Canal expansion and the potential for increased trade with Asia.
Ultimately, Florida’s competitive costs, combined with one of the world’s most extensive transportation infrastructures, a talented workforce and low unionization rate can help manufacturing businesses find a competitive advantage and grow their bottom line.