Wisconsin Governor Signs Energy Tax Break Legislation

Wisconsin companies will be exempt from sales taxes on the energy they buy to run their factories, according to a law signed recently by Gov. Jim Doyle.

Doyle signed the legislation at the Appleton headquarters of Appleton, the company formerly known as Appleton Papers, to call attention to the industry that's the largest consumer of energy in Wisconsin.

Papermakers led the push for the exemption, noting that 31 other states offered similar tax arrangements.

The former Appleton Papers would save $350,000 to $400,000 a year based on current energy costs, said Bill Van Den Brandt, a spokesman for the employee-owned company. He said the specialty papermaker could use such savings to invest in acquisitions or new technologies to help the company diversify from its chief business -- carbonless paper -- which has had declining demand.

Savings from the exemption would be even greater at paper mills, as opposed to the coating and converting operations at Appleton, because mills use more energy.

"It's certainly good news for the paper industry," Van Den Brandt said of the new law. "And I think it's good news for Wisconsin manufacturers in general, because it helps them control their costs and be more competitive."

The exemption begins Jan. 1, 2006, and replaces the current income tax credits for sales taxes that manufacturers pay on energy. Claims for past credits will be subject to a two-year moratorium under the new law, and after that, the state will require companies to show that they have maintained their employment and made annual investments in their operations in the state.

"We need to encourage companies to stay and grow, not reward those that leave," Doyle said in a statement.

The Legislative Fiscal Bureau has estimated that the switch to tax exemption from tax credit would result in a net loss of about $9 million a year in state revenue.

Knight Ridder Tribune