HB1303
To Create The Sustainable Aviation Fuel Incentive Act; And To Create An Income Tax Credit Related To Sustainable Aviation Fuel.
AI-Generated Summary
This bill, titled the "Sustainable Aviation Fuel Incentive Act," aims to create tax incentives for businesses involved in the production of sustainable aviation fuel in Arkansas. It establishes an income tax credit for qualified manufacturers of sustainable aviation fuel, which is defined as kerosene-type jet fuel derived from wood biomass. To qualify for the credit, a business must enter into an "incentive agreement" with the Arkansas Economic Development Commission. This agreement requires a significant capital investment of over two billion dollars in a "qualified sustainable aviation fuel project," defined as a facility that manufactures sustainable aviation fuel, begins construction by December 31, 2027, and will employ at least seventy-five new full-time permanent employees. The tax credit is calculated as thirty percent of the cost of purchased sustainable aviation fuel production and processing equipment. The credit is subject to certifications from the Arkansas Economic Development Commission and the Department of Energy and Environment, and requires a positive cost-benefit analysis. Unused credits can be carried forward indefinitely. The act also outlines specific criteria for "new full-time permanent employees" and details the performance criteria and claw-back provisions that must be included in the incentive agreements. The provisions of this act are effective for tax years beginning on or after January 1, 2025.
Potential Impact Analysis
Who Might Benefit?
The primary beneficiaries of this bill are businesses that meet the definition of a "qualified manufacturer of sustainable aviation fuel" and propose to undertake a "qualified sustainable aviation fuel project" in Arkansas. This includes companies involved in the manufacture, refinement, or processing of sustainable aviation fuel. The incentives are designed to attract significant capital investment, as evidenced by the two-billion-dollar threshold for facility cost. Additionally, individuals who become "new full-time permanent employees" within these projects, particularly those earning at least $100,000 annually if not directly working on the project, may also benefit through job creation and potential salary increases. The state of Arkansas, through potential economic development and increased tax revenue from these new industries, could also be considered a beneficiary.
Who Might Suffer?
The entities most directly and negatively impacted by this bill are potentially the taxpayers of Arkansas. The bill creates significant tax credits and incentives, which could lead to a reduction in state tax revenue. This reduction might necessitate cuts in other state services or lead to increased taxes in other areas to compensate for the lost revenue. While the bill aims to attract new businesses and jobs, there's a risk that the projected economic benefits may not fully materialize, leaving the state with a diminished tax base without the anticipated corresponding economic growth. Furthermore, existing businesses in Arkansas that do not qualify for these specific incentives may perceive an uneven playing field, although this impact is indirect.