Contact:
Eva Robelia, Communications Officer, 608-261-2271
MADISON – Significant tax relief is on the way for Wisconsin’s paper industry, according to a report recently released by the Wisconsin Department of Revenue.
“This is fantastic news for Wisconsin and our paper industry,” said Governor Jim Doyle. “The industry provides many high paying jobs and by improving the tax climate the state will retain and encourage business growth.”
Based on the study, Wisconsin currently ranks in the middle of the pack for tax climate among 10 major industrial states. But thanks to Grow Wisconsin initiatives such as the creation of the Sales Tax Exemption for Fuel and Electricity Used in Manufacturing, as well as the adoption of Single Sales Factor Apportionment, the tax climate for Wisconsin’s paper industry will dramatically improve. After these changes are fully implemented, Wisconsin will rank second best in terms of tax climate.
The new sales tax exemption that becomes effective in 2006 allows purchases of fuel and electricity used in manufacturing to be tax exempt at the time of the sale. This is a major change from the prior method that required the business to tally all their sales tax and then claim it on their tax return at the end of the reporting period. This immediate benefit allows the business to no longer be dependent on having income tax liability in order to receive the tax benefit.
Beginning next year, Wisconsin will also begin phasing in the Single Sales Factor Apportionment formula. Under this new law, the income of multi-state businesses will be apportioned to the state using only the amount of sales made in Wisconsin and will no longer be established on a formula that includes Wisconsin based payroll and property.
“By eliminating the ‘Job Tax’ pieces from the formula, businesses are now able to freely locate and expand in Wisconsin without worrying about penalties,” said Wisconsin Department of Revenue Secretary Michael L. Morgan. “This is a win-win situation for the state of Wisconsin and our paper industry.”
In addition, manufacturers that meet certain conditions will continue to be able to use manufacturers sales tax credit carried forward from prior years to offset income tax liability in the future. Manufacturers with more than $25,000 of unused credit will be allowed to amortize the unused credit over 15 years, beginning in 2008, if they meet certain investment tests such as retention of jobs or investment in their production facilities.
The Department of Revenue’s report chose 10 industrial states in which to place a hypothetical paper industry to measure the income, franchise, property and sales tax climate. The analysis revealed that once Single Sales Factor Apportionment and the sales tax exemption are fully implemented, Wisconsin will become a more favorable destination for businesses.
For an electronic version of the “Corporate Tax Burden Comparison: Paper Industry” report, please visit the Department of Revenue web site at www.dor.state.wi.us.
