Quality Magazine

CA Creates Green Manufacturing Sales Tax Exemption

March 29, 2010

SAN JOSE, CA - Governor Arnold Schwarzenegger has signed into law the bill SB 71, that will exempt green manufacturers from paying sales and use taxes on manufacturing equipment to encourage investment in manufacturing, job creation and economic growth in California. "California is leading the way with the largest green economy in the nation, creating jobs when they're needed the most and proving to the world that we can protect our environment and build a stronger economic future at the same time," said Governor Schwarzenegger.

"We're sending a clear message to every entrepreneur and innovator that it pays to invest in a clean future for California," the governor said.

The bill was signed in San Jose at a ceremony at the U.S. branch of Nanosolar, Inc. This international company based in Switzerland manufactures thin-film solar cells printed on foil.

Nanosolar founder Brian Sager said, "The SB71 manufacturing sales tax exemption helps Nanosolar remain in California, where we plan to further expand our solar cell factory, grow jobs and support the state economy."

SB 71 targets alternative energy and advanced transportation technology investments that create new, permanent jobs in California and produce quantifiable reductions in the emission of greenhouse gases, reductions in air or water pollution, or increase energy efficiency. Senate Bill 71 was authored by Senator Alex Padilla (D-Pacoima), senator Elaine Alquist (D-Santa Clara) and senator Tony Strickland (R-Thousand Oaks). "California is one of only three states in the nation that does not provide a sales tax exemption or tax credit for the purchase of green manufacturing equipment," said Senator Padilla, who chairs the Senate Energy, Utilities and Communications Committee. "California should be the nation's leader in manufacturing green technology. The best way to lead is by incentivizing investments that create jobs," he added.

SB 71 requires that projects receiving tax exemptions have a net tax benefit to the state at least equal to the tax benefit of the manufacturer benefiting from the exemption.

It also requires that these projects are targeted in areas with high unemployment. Additionally, SB 71 will ensure accountability by requiring the Legislative Analyst's Office to report to the Legislature on the effectiveness of the program. "This bill will energize the advanced transportation and the alternative energy sectors of our economy," said Senator Padilla at the ceremony. "We are sending a clear message to manufacturers: locate and expand in California."

"SB 71 will help us jump-start green technology manufacturing and create good-paying jobs with a future for California," said the state's treasurer Bill Lockyer. "I'm committed to implementing the program in a way that not only financially benefits businesses, but also helps preserve vital public services by generating revenues the state and local governments need to balance their budgets."