California bill provides sales tax exemption for recycling equipment

Published: Sep 16, 2015 16:04

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The bill AB 199, which proposes sales tax exemption on equipment used for recycling and composting, will now head to Gov. Jerry Brown to be signed into law.

By Paul Ploumis 16 Sep 2015 Last updated at 03:44:17 GMT

LOS ANGELES (Scrap Monster): The California legislature has passed a bill that grants sales tax exemptions for equipment purchases to MRF operators and recycling companies. The bill AB 199 creates sales tax exemption on equipment used for recycling and composting. The bill authored by Susan Talamantes Eggman was supported by advocacy group ‘Californians Against Waste’.

According to the provisions of the bill, companies involved in recycling activities could apply for tax exemptions. In addition, MRFs purchasing new sorting equipment, manufacturers who make use of recycled feedstock to generate new products and composters are also eligible to apply for tax exemption. The companies will be exempted from state and local portions of the sales and use tax, which may range from anywhere between 7.5% and 10%.

The legislation is expected to generate new manufacturing jobs as companies will be motivated to make the most of materials that are either discarded or often shipped overseas. Also, it is expected to help the state in achieving its recycling goal of 75% by 2020, by promoting new investments in recycling infrastructuture. As per rough estimates provided by CalRecycle, California exports nearly 20 million tons of recyclables worth almost $8 billion every year.

Under the legislation, recycling companies are required to forward their application for tax exemption to the California Alternative Energy and Advanced Transportation Financing Authority (CAEATFA). The agency will then approve the application after determining the economic benefits of the exemption. The tax exemptions per calendar year are restricted to $100 million.

The bill passed by the Senate and Assembly, will now go to Gov. Jerry Brown to be signed into law.

sales tax scrap recycling

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