Stricken language would be deleted from and underlined language would be added to present law



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Stricken language would be deleted from and underlined language would be added to present law.

State of Arkansas As Engrossed: S2/15/11

88th General Assembly A Bill

Regular Session, 2011 SENATE BILL 275
By: Senators B. Sample, G. Baker, Burnett, J. Dismang, Files, Fletcher, G. Jeffress, J. Jeffress, M. Lamoureux, Rapert, J. Taylor, Teague, J. Hutchinson, Luker
For An Act To Be Entitled

AN ACT TO PROVIDE AN INCENTIVE TO ENCOURAGE THE BUILDING AND OPERATING OF HIGH-EFFICIENCY ELECTRIC POWER GENERATORS UTILIZING COMBINED-CYCLE TECHNOLOGY BY REVISING THE DEFINITION OF “MANUFACTURER” FOR THE PURPOSE OF REDUCING THE EXCISE TAX RATE ON NATURAL GAS AND ELECTRICITY USED IN MANUFACTURING SUBJECT TO A PHASE-IN OF THE REDUCED RATE OF TAX; TO DECLARE AN EMERGENCY; AND FOR OTHER PURPOSES.



Subtitle

TO ENCOURAGE THE BUILDING AND OPERATING OF HIGH-EFFICIENCY ELECTRIC POWER GENERATORS BY REVISING THE DEFINITION OF “MANUFACTURER” TO REDUCE THE TAX ON NATURAL GAS AND ELECTRICITY USED IN MANUFACTURING; TO DECLARE AN EMERGENCY.

BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF ARKANSAS:

SECTION 1. DO NOT CODIFY. The General Assembly finds that:

(1) There will be a need for additional electrical generation in the state to supply the utilities that serve state individuals and industry;

(2) Natural gas for electrical generation is the cleanest and most efficient energy produced from fossil fuel used to generate electricity, and it is in the best interest of the state to encourage the use of this technology for generating electricity;

(3) The state is at a competitive disadvantage compared to the surrounding states to attract the building and operating of high-efficiency electric power generators because the state imposes a six percent (6%) sales tax on the purchase of natural gas used to generate the electricity;

(4) The state has an abundant supply of natural gas at low cost to power high-efficiency, combined-cycle technology electric power generators, and the disadvantage of the high tax should be removed as an incentive to utilities and private industry to construct and operate high-efficiency generating facilities; and

(5) Other manufacturers in the state enjoy a tax reduction on natural gas used in manufacturing, and these high-efficiency, combined-cycle technology electric power generators that manufacture electricity for resale on the wholesale market should be granted the same exemption as other manufacturers.
SECTION 2. Arkansas Code § 26-52-319(b)–(f), concerning the sales tax on natural gas and electricity used by manufacturers, is amended to read as follows:

(b) As used in this section, “manufacturer” means a manufacturer:

(1) Manufacturer classified within sectors 31 through 33 of the North American Industry Classification System, as in effect on January 1, 2007.; and

(2) Generator of electric power classified within sector 22 of the North American Industry Classification System, as in effect on January 1, 2011, that uses natural gas to operate a new or existing generating facility that uses combined-cycle gas turbine technology.

(c) In lieu of the tax rate under subsection (a) of this section, the excise tax rate levied on the gross receipts or gross proceeds derived from the sale of natural gas and electricity to a manufacturer as defined in subdivision (b)(2) of this section is as follows:

(1) Beginning July 1, 2011, five and one-fourth percent (5 1/4%);

(2) Beginning July 1, 2012, four and one-fourth percent (4 1/4%); and

(3) Beginning July 1, 2013, the rate under subsection (a) of this section.

(c) (d) Natural gas and electricity subject to the reduced tax rate levied in this section shall be separately metered from natural gas and electricity used for any other purpose by the manufacturer or otherwise established in accordance with the rules issued under subsection (e) (f) of this section.

(d) (e) Prior to Before the sale of natural gas or electricity at the reduced excise tax rate levied in this section, the director may require any seller of natural gas or electricity to obtain a certificate from the consumer, in the form prescribed by the director, certifying that the manufacturer is eligible to purchase natural gas and electricity at the reduced excise tax rate.

(e) (f) The director shall have and be invested with full power and authority to promulgate rules for the proper administration of this section.

(f) (g) The gross receipts or gross proceeds derived from the sale of natural gas and electricity to a manufacturer shall continue to be subject to:

(1) The excise tax levied under the Arkansas Constitution, Amendment 75, § 2; and

(2) All municipal and county gross receipts taxes.


SECTION 3. Arkansas Code § 26-53-148(b)–(f), concerning the compensating use tax on natural gas and electricity used by manufacturers, is amended to read as follows:

(b) As used in this section, “manufacturer” means a manufacturer:

(1) Manufacturer classified within sectors 31 through 33 of the North American Industry Classification System, as in effect on January 1, 2007.; and

(2) Generator of electric power classified within sector 22 of the North American Industry Classification System, as in effect on January 1, 2011, that uses natural gas to operate a new or existing generating facility that uses combined-cycle gas turbine technology.

(c) In lieu of the tax rate under subsection (a) of this section, the excise tax rate levied on the gross receipts or gross proceeds derived from the sale of natural gas and electricity to a manufacturer as defined in subdivision (b)(2) of this section is as follows:

(1) Beginning July 1, 2011, five and one-fourth percent (5 1/4%);

(2) Beginning July 1, 2012, four and one-fourth percent (4 1/4%); and

(3) Beginning July 1, 2013, the rate under subsection (a) of this section.

(c) (d) Natural gas and electricity subject to the reduced tax rate levied in this section shall be separately metered from natural gas and electricity used for any other purpose by the manufacturer or otherwise established in accordance with the rules issued under subsection (e) (f) of this section.

(d) (e) Prior to Before purchasing any natural gas or electricity at the reduced excise tax rate levied in this section, the director may require any seller of natural gas or electricity to obtain a certificate from the consumer, in the form prescribed by the director, certifying that the manufacturer is eligible to purchase natural gas and electricity at the reduced excise tax rate.

(e) (f) The director shall have and be invested with full power and authority to promulgate rules for the proper administration of this section.

(f) (g) The purchase of natural gas and electricity by a manufacturer shall continue to be subject to:

(1) The excise tax levied under the Arkansas Constitution, Amendment 75, § 2; and

(2) All municipal and county compensating use taxes.


SECTION 4. EMERGENCY CLAUSE. It is found and determined by the General Assembly of the State of Arkansas that there is a need for additional clean and efficient electric generating capacity in the state; that the state should provide an incentive for the construction and operation of high-efficiency electric generating facilities to fill that need; that the sales and use taxes that the state imposes on natural gas used in high-efficiency electric generating facilities far exceed the taxes imposed by most surrounding states; that electric power generation has historically been treated as manufacturing for sales and use tax purposes in the state; that the state has an interest in encouraging the use of clean and efficient generating technologies pending the development of alternate energy technologies; and that including high-efficiency power generation in the definition of “manufacturing” for purposes of the reduced sales and use tax on natural gas will stabilize the tax burden, preserve the funding source, and encourage the use of natural gas in high-efficiency power generating facilities in the state. Therefore, an emergency is declared to exist and this act being necessary for the preservation of the public peace, health, and safety shall become effective on July 1, 2011.
/s/B. Sample

*JLL079* 02-08-2011 15:04:00 JLL079



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