PHOENIX — The Arizona House gave final approval Monday to a bill granting
new tax breaks of $50 million over three years for insurance companies that
invest in high technology companies.
The bill being pushed by Republican House Speaker Andy Tobin is designed to
funnel savings that insurance companies receive from lowered premium taxes into
a new high-tech fund overseen by the Arizona Commerce Authority.
The bill gives insurers a credit against their premium taxes of up to $10
million in the budget year beginning July 1 and $20 million in the next two
years for the investments. They can carry unused credits forward for 15 years if
they can’t use it in the year it’s earned.
“What we’re trying to do is figure out ways to move capital into investment,”
Tobin said after the 45-15 House vote. The money would be used by the Commerce
Authority to help high-tech businesses relocate or expand. The state would
recover the first $50 million in credits from profits earned from their
investments and split any additional revenue, but there’s no guarantee any of
the money would be repaid.”
“It’s an interesting dynamic, we’ve not tried that before,’ Tobin said.
A second tax credit bill that had been set for its initial approval was pulled
from consideration Monday. That bill, by Rep. Tom Forese and backed by Tobin,
would lower the property tax rate assessed on fixtures and other so-called
“personal” property for businesses that expand and add jobs. It was amended in
committee to give a new tax break for the self-employed. The value of the
business tax break isn’t known, but the self-employed reduction is valued at $58
million a year.
The amendment caused some heartburn and Forese said more changes would be
needed before he tries again to bring it to the floor.
Together, the bills build on previous Republican efforts to make Arizona’s tax
climate more business friendly.
But they come before the bulk of a Republican-championed 2011 economic
development package comes on line. Business tax cuts valued at $538 million when
fully in place in 2018 and a capital gains tax cut benefiting high-income
Arizonans valued at $108 million are key parts of that package.
They also come during a tight budget year when a temporary sales tax that
brought in about $1 billion a year and helped the state avoid more budgets cuts
is set to expire.
Minority Democrats generally oppose additional tax cuts, arguing the state
needs to restore funding to schools and services cut during the Great Recession.
Still, the bill that passed Monday drew bipartisan support, mainly because it
was targeted and did not contain across-the-bard tax cuts.