California manufacturers want the state to stop sales tax

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SACRAMENTO, Calif. (KTXL) – California manufacturers want the state to stop taxes on new equipment purchases because those taxes are a drag on the industry.

This is happening as manufacturers strive to modernize production and make it more efficient as supply chain issues continue to impact the country and the world.

“It’s simple. We didn’t come up with a complicated formula. We just said, ‘If you want to buy something, please buy it. You’ll be exempt from sales tax, so you can buy more and create more jobs,'” he said Lance Hastings, CEO of the California Manufacturers and Technology Association.

Hastings said California taxes both the manufacturing equipment and the product at some of the highest rates in the country. In some cases it reaches up to 10.75%.

Experts note that as innovative as California is, the state attracts only 1% of new manufacturing investment in the United States due to financial strains.

“We help machines and processes and robots move back and forth up and down and around,” said Pamela Kan.

Kan is the owner of Bishop-Wisecarver, a smaller Bay Area manufacturer. She notes that most manufacturers in California are small and medium-sized.

“Take the device sales tax off the table for small and medium-sized manufacturers. It’s a huge competitive win for us. I compete with competitors in lower cost states. Efficiency is the key for me. If I can produce my products more efficiently by staying on the cutting edge of technology and using the latest equipment, I can stay in California and keep my prices competitive,” explained Kan.

Manufacturers said cutting the tax could give companies more purchasing power to upgrade their equipment so it’s more efficient and up to date. They also said the industry could continue to grow in California, expanding the workforce and potentially adding billions more to the state’s economy.

“We are the number one manufacturing state in the country. We have the most employees, 1.3 million, and our proposal, based on an economic study, would increase California’s manufacturing employment base by over 10%,” Hastings said. “So it would create new jobs, and every job in manufacturing supports 2 1/2 other jobs.”

“If we are not able to manufacture what this state needs, it really puts the state at risk for future growth,” Kan said.

Industry leaders are hoping lawmakers will approve their proposal, either through state budget hearings this spring or through the 1951 Assembly Bill.

The bill has no registered opposition.

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