This month, Florida Governor Rick Scott announced his Building Up Florida Manufacturing proposal, which would eliminate taxes on equipment purchases and train workers from other sectors who are transitioning to manufacturing jobs. The initiative is intended to drive small manufacturing business growth and jobs in the state.
In an effort to stimulate manufacturing investment and spur industry expansion in Florida, Scott announced his plan to end the sales tax on manufacturing equipment and machinery. In his proposal, the governor said current tax policy puts Florida at a competitive disadvantage to other states, which do not require taxes on equipment purchases. He said that he will attempt to completely eliminate a 5 percent productive output requirement that businesses have to attain in order for them to receive a sales tax exemption on equipment. Scott has already reduced the output requirement from 10 percent.
During a recent Florida cabinet briefing, Al Stimac, the president of the Manufacturers Association of Florida (MAF), outlined the implications of the manufacturing sales tax, noting that the current policy:
- Discourages capital investment;
- Penalizes existing businesses that are not expanding, but upgrading;
- Deters recruitment of new manufacturing businesses and
- Imposes a regulatory burden on existing businesses.
As part of the Building Up Florida Manufacturing jobs proposal, the governor said that he is working with the state legislature to increase funding for the Quick Response Training (QRT) program, which would train workers from other industries to prepare them for manufacturing jobs. According to the program website, eligible candidates include existing and expanding “Florida businesses that produce exportable goods or services; create new permanent, full-time jobs; and employ Florida workers who require customized entry-level skills training.”
During a recent tour of Hernon Manufacturing’s Orlando headquarters, Scott reiterated how tax cuts on equipment purchases could change the outlook for the development of Florida’s manufacturing sector and provide employment opportunities for the state’s residents.
“When manufacturers purchase equipment in our state, they are investing in Florida for years to come. We want more manufacturers to move to Florida, and our existing manufacturing companies, like Hernon, to buy the equipment they need and grow and create more jobs to support Florida families,” he said.
Hernon’s owner noted that the adhesive sealant and precision dispensing equipment supplier would have saved “between $15,000 and $20,000” during the company’s expansion last year, if not for the current tax.
The elimination of the tax would benefit thousands of manufacturers in the state. According to MAF, there are currently 18,099 manufacturers in Florida, and these businesses employ 317,690. Florida is the fourth-largest manufacturing state in the country in terms of establishments.