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Week 10 of the 2016 legislative session is wrapped up with some significant developments at the Capitol. We reached agreement on some tax issues that have bogged us down for some time when the House and Senate agreed to couple the Iowa tax code with the federal code as we have for a number of years. The passage of this bill will save $97 million dollars for our small businesses, rural communities and teachers. This is money Iowans can keep in their pockets and reinvest in our state and community.
Also part of the agreement was clarifying the Iowa Department of Revenue policy on collection of sales tax. In recent years the department had been assessing sales tax to “consumables”, or products that were used in manufacturing processes. Examples of consumables are drill bits, saw blades, filters and similar items that have a short useful life. Many of us considered this to be double taxation because the end product was also subject to sales tax. With this agreement many of those consumables will no longer be assessed a sales tax. This was a compromise in the sense that this change probably didn’t go far enough, but it is an acceptable improvement over previous policy.
Another bill that passed the Senate this week on a 46-4 vote was a new suppressor bill legalizing firearm suppressors in Iowa. Under the terms of this bill a person wanting to purchase a suppressor must comply with federal law which requires a person to be a resident of the U.S., legally eligible to purchase a firearm, pass a background check by the Bureau of Alcohol Tobacco Firearms and Explosives (ATFE), pay a onetime $200 transfer tax per suppressor, live in a state that authorizes suppressors, and be at least 21 years of age.
The bill removes suppressors from the list of offensive weapons, and establishes a process for purchase of a suppressor including application to the chief law enforcement officer where the person resides. The officer has 30 days to issue certification if the applicant meets all the above conditions. The bill creates a class “D” felony for possession of a suppressor in Iowa in violation of federal law, and will be effective upon enactment. The Senate attached a technical amendment to this bill, so it will have to go back to the House for final approval, but passage is almost certain.
This week the Senate also passed SF2300 which establishes a renewable chemical tax credit program. The tax credit is 5 cents per pound of renewable chemicals produced in the state and allows new businesses to get up to $1 million in tax credits. Established businesses that have been in the state more than five years can get up to $500,000 in tax credits. Credits are refundable and non-transferrable, and companies can only apply for and receive these credits five times. Maximum credits available for this program is $10 million.
Iowa currently ranks first in corn production, second in soybean production, second in biodiesel production, and has the second largest supply of biomass at 14.4 million dry tons per year. We lead the nation in ethanol production with 43 facilities. Other agricultural states in the Midwest are going to be competing for these biochemical companies to set up shop in their own states. This program could solidify Iowa’s position as the leading biochemical producing state in the country.
With the good progress we made this week we hope to be able to wrap up the legislative session as scheduled by April 19.
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