|FOR IMMEDIATE RELEASE||Contact: Cory Fong, Tax Commissioner, 701-328-2770|
|Tuesday, September 26, 2006|
Tax Commissioner Proposes Improvements To Renewable Energy Incentives
BISMARCK, N.D. – Tax Commissioner Cory Fong announced today that he will be working with members of the legislature to develop a meaningful package for the 2007 session dedicated to growing the state’s renewable energy industry.
“North Dakota’s energy industry is experiencing a resurgence, especially in the area of renewables,” said Fong. “We are emerging as one of the country’s leading exporters of energy and we need to encourage this trend. It is not only good for our state; it is good for our entire nation.”
Citing several examples of renewable energy projects currently being developed across the state, Fong discussed how tax incentives, and the administration of those incentives, have played a critical role in spurring this activity. Over the years, especially during the most recent 2005 legislative session, numerous key tax incentives were put in place to stimulate growth in the renewable energy industry. The incentives target biodiesel and ethanol production and wind generation, and offer sales, income, and property tax credits.
“These incentives are meaningful and they are having a profound impact on the development we are seeing around our state,” said Fong. “Four ethanol and two biodiesel plants are under construction; new wind turbines are spotting our North Dakota landscape, all since the last legislative session. These incentives are working; they are creating jobs and opportunities in our rural communities.”
Fong also discussed ways to improve and expand the existing incentives to make them easier to use and more attractive to developers of renewable energy projects.
“My experience working with our staff, other state agencies, and members of the industry on the application of these incentives has led me to believe that with some minor adjustments, we can significantly improve these incentives,” said Fong. “We can make them easier to use.”
As an example, Fong points to the sales tax exemption for materials used in the construction of an agricultural commodity processing facility, such as an ethanol plant. Currently, the sales tax exemption applies only to construction materials purchased directly by a primary owner of a large-scale project, and not to purchases made directly by contractors working on a project. Fong suggests that the sales tax exemption enjoyed by the primary owner could be passed onto certain contractors working on these projects, which would reduce financing costs and speed up development of a project.
“This minor adjustment in sales tax administration will significantly reduce the up-front financing for these large-scale projects, reduce the amount of development time, and ultimately encourage more activity,” said Fong. “This is good for the industry and good for North Dakota.”
Fong outlined other improvements that he plans to propose this next legislative session that will encourage more renewable development in North Dakota.
“At a time when our nation is looking for ways to reduce dependence on foreign sources of energy,” said Fong, “North Dakota needs to step up its efforts and encourage all forms of energy development, especially in the area of renewables. North Dakota’s entire energy industry is booming and we need to set the stage for continued expansion in this vital industry.”
# # #