Senator Flanagan Announces Passage Of Small Business Assistance Package

John J. Flanagan

February 13, 2007

Senator John J. Flanagan (2nd Senate District) announced Senate passage of a small business and manufacturing assistance plan that targets the biggest concerns of small business and aims to remove some of the obstacles that these job creating businesses face. This plan, which Senator Flanagan sponsored in the Senate, would provide $590 million in assistance in the first year and almost $1.3 billion in tax relief and assistance to small businesses when fully implemented after three years.

"Small businesses mean real jobs for Long Islanders and this tax relief plan is aimed at making small business work. The owners of small businesses are the backbone of our economy and we must provide them with the tools they need. This tax relief package will provide those tools and will make success a realistic goal to Long Island businesses and their employees," stated Senator Flanagan.

This small business package would eliminate some obstacles that are now impeding the growth of these vital business engines and also provide some much needed assistance. These changes are aimed at transforming the small business climate to foster job growth throughout the state.
Key to the Long Island's small business population are tax cuts specifically designed to help the local owners build their businesses.

At the center of this package is a Small Businesses STAR Property Tax Rebate program. This plan establishes a Small Business STAR program that would provide direct property tax rebate checks to small businesses that pay school property taxes and employ no more than 20 people.

This program will work much like the STAR rebate program by providing businesses with a rebate check on the school taxes paid. This program is estimated to provide approximately $150 million in property tax relief for hard working entrepreneurs.

To further his efforts to assist small businesses, the plan supported by Senator Flanagan would commercialize the Centers of Excellence and Genesis Centers Research to free many of our growing businesses. This piece would serve as a much-needed bridge between State-sponsored Research and Development and the manufacturing community of our state by removing barriers to companies that have created R&D jobs from manufacturing in New York State.

Currently, tax law penalizes these R&D companies and the Empire Zone program does not afford those companies to be treated as a new business and that combination discourages expansion in the State. The Senate package would favor companies who wish to expand their operation and encourage them to expand and invest in New York.

A business that is connected through the State’s premier academic and business incubators for research and development will now be afforded refundable wage and investment tax credits to lure the manufacturer of that advanced technology to the State.

The tax portion of the Senate's small business tax package also calls for:

-Eliminating the income tax and corporate franchise tax on manufacturers, regardless of size to provide an estimated $550 million in tax relief;

-Reducing Corporate Franchise Tax rates from 7.5 percent to 6.85 percent to provide these businesses with $150 million in relief. This would have a positive effect on all areas of commerce by attracting new business, supporting existing enterprises and creating more jobs for our region; and

-Providing $20 million in relief through reforms of the corporate franchise tax. Although many small businesses pay income taxes under the personal income tax, they are required to compute their tax as if they paid under the corporate franchise tax. This proposal would eliminate this need and, as a result, small businesses would only be subject to the personal income tax as they are in a majority of the other states.

This reform of small business tax filing would deliver $20 million to New York's small businesses to invest in the New York economy.

Senator Flanagan and his colleagues have initiated tax cuts and reductions that have provided taxpayers with a cumulative savings of more than $126 billion. This package would build on the Senate’s record by specifically targeting small business job growth and provide an economic climate that will foster growth and jobs.

To further these efforts to provide assistance to small businesses, the package would also help businesses by reducing their energy costs. Energy costs were cited by 41 percent of the Business Council survey as one of the top four concerns with small business owners citing increased energy costs as one of the biggest problems they face in staying competitive.

The Senate small business plan would address that concern by providing a $350 million refundable tax credit program that would help 386,000 eligible small businesses across New York State afford the rising cost of energy. Under the plan, a business with 20 or fewer employees can receive a credit of two cents per Kilowatt Hour (KwH) that would be applied directly to eligible businesses' tax liability, while businesses that do not owe taxes would receive a rebate check.

To further assist small businesses cover their increased fuel costs, the Senate plan would eliminate Petroleum Business Tax (PBT) on Non-Residential Heating Fuel. Just as current law provides a full exemption from State taxes on petroleum fuel sold for residential heating purposes, this change would provide needed energy cost relief to the businesses of New York State and would reduce energy expenses for small businesses by $7 million annually.

Finally, the plan would call for sales tax exemption for businesses located in Academic Incubator Facilities. These companies would receive a state sales tax exemption for the purchase of equipment costing $500 or more. These companies, by nature, are small and have limited resources and this sales tax exemption would reduce equipment costs and save companies $500,000 annually in state taxes.

To further the savings, the legislation also permits localities to opt into this exemption. That would mean double the savings for small businesses if all localities opt into the exemption.

"Small businesses are the engine of New York State's economy. The men and women who supply the sweat equity that makes them work deserve our appreciation and our assistance as they create the jobs our region needs. This is a package designed to let them know that their work is important to our state and that they play a vital role in our economic future," stated Senator Flanagan.

The plan was passed in the Senate and has now been sent to the Assembly for further action.