Lowry signs tax incentive legislation to help manufacturers

SEATTLE -- Up to 2,700 manufacturing businesses are expected to benefit from a new tax incentive measure signed into law today by Gov. Mike Lowry.

House Bill 2484 which is expected to save manufacturers about $15 million per year will extend an existing tax exemption to include machinery and equipment that manufacturers use to research and develop potential new products. Under the new law, companies will be able to buy research and development equipment without paying up to 8.2 percent sales or use taxes on that equipment.

Lowry said HB 2484 is the latest in a series of tax incentive measures that are helping Washington companies expand or stay in business, while also encouraging outside manufacturers to locate in the state.

"Our state's exceptional quality of life is a major part of the reason why companies are choosing to expand into Washington," Lowry said. "When you add to that such job-creating tax incentives as this new law, and others we have enacted recently, it's no wonder that our state's job growth rate is expected to be twice the national average over the next couple of years."

Lowry signed the legislation at the Boeing Integrated Systems Lab in Seattle where computer simulations were used to accelerate the development of the Boeing 777. The governor said the legislation will likely increase R&D investment into aerospace, forest products, transportation equipment and practically anything else that manufacturers conceivably could build.

According to Lowry, the R&D tax incentives, coupled with manufacturing repair and replacement tax incentives he signed into law Thursday, will solidify the gains the state has made since it last year eliminated the sales and use tax on the purchase of machinery and equipment used directly in manufacturing.

The 1995 law, he said, has made the state more competitive with other states and has led to more than $3 billion in investment by major manufacturers. Earlier this month, the Taiwan Semiconductor Manufacturing Company announced that it would build a $1.2 billion silicon chip foundry in Clark County.

Lowry said last year's tax incentives have already produced strong results, and this year's legislation will help the state follow through on other recommendations of a manufacturing advisory committee. That committee concluded that Washington's high sales tax had become a serious deterrent to capital investment in this state.

Lowry said the R&D incentives will spur long-term growth of the economy, further broaden the industry diversification that has helped the state weather the Boeing slump and still increase jobs, and capitalize on Washington's reputation as a high-technology state.

In addition, he said, the R&D incentives, coupled with similar high-tech incentives enacted at his request in 1994, will encourage companies to locate in Washington, while the manufacturing tax incentives enacted in 1995 will encourage manufacturers to build their new products here.

"We're making this state more attractive to mature companies and entrepreneurial startups alike," Lowry said. "We are creating good-paying R&D jobs in this state, and we're laying the groundwork for getting the manufacturing jobs that may eventually result from that research. That makes this a wise investment in our economic future."

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For more information, contact the Governor's Communications Office at 360-753-6790.