Tax abatement motions pass
Published 12:00 am Thursday, May 31, 2007
DEMOPOLIS &8212; The Industrial Development Board passed two important motions during their meeting yesterday. Up for review were resolutions for tax abatements for Newell Paper Company and Foster Farms.
Under Alabama tax law, any company or tax payer may qualify for an abatement, or stay, of taxes under certain conditions. According to Alabama Department of Revenue, The Tax Incentive Reform Act of 1992 was passed to attract new industries and encourage existing industries to expand.
There are two kinds of tax abatements that companies may qualify for. The first is an abatement on property or personal property taxes, which involves any taxes paid on actual property purchased. The second kind of tax abatement is on sales and use taxes which may be incurred while buying any materials to expand or build said endeavors.
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Newell Paper Company applied for a tax abatement to assist in their move to a new building in the South Industrial Park. They have been leasing property to carry out their operations, but will now occupy the building that the Industrial Development Board built through an Alabama Power Company building initiative. This specifications building was built to encourage development in the area.
Jay Shows, the executive secretary of the Industrial Development Board, said that the new project will allow the board to regain their investment in the South Industrial Park.
The Newell Paper Company project will involve an investment of approximately $1 million from the company. Because this amount is at least 30 percent of the original cost of coming to the area, the company qualifies for a tax abatement.
After a vote Wednesday, Newell Paper Company was awarded an abatement of $4,900 a year for up to 10 years of property and personal tax. In addition, the board voted to approve a one-time estimated sales and use tax abatement of $24,000 for the company. The resolution passed unanimously.
All of the taxes that were voted on by the board are none-education taxes, or those percentages of tax revenue that do not go to support education.
The larger of the two projects voted on Wednesday involved Foster Farms, a leading supplier of poultry products. Foster Farms first came to the Demopolis area when they purchased what was then the Griffith Packing Company. Since that time, Foster Farms has increased their operations and will now be making a $9 million investment in Demopolis.
The board also voted on and unanimously approved a tax abatement for Foster Farms. They have been approved for a property and personal property tax abatement of $18,000 a year for up to 10 years. In addition to bringing industry to the area, Foster Farms expects to bring in 55 new jobs in the near future. As one of the company&8217;s few plants in the Southeast, this is a significant project.
In order to gain perspective on the economic impact that Foster Farms&8217; new endeavor will have, Shows explains that the salary from one job can increase in value by 2.5 times in a local community. Therefore, the 55 jobs created by the new Foster Farms project could create significant industrial expansion in the area.