Bill > SB376

This bill extends and modifies a sales and use tax exemption for businesses engaged in manufacturing, processing, refining, fabricating, or recycling, as well as those involved in research and development (R&D). Specifically, it adds Section 6377.4 to the Revenue and Taxation Code, which exempts qualified tangible personal property purchased for use in these activities from state sales and use taxes. The exemption is for property used primarily in any stage of manufacturing, processing, refining, fabricating, or recycling tangible personal property, from the introduction of raw materials to the completed product, including packaging. It also covers property used primarily for R&D, and property used to maintain, repair, measure, or test exempt property. The bill clarifies definitions for terms like "manufacturing," "processing," and "qualified person," which is defined as a business primarily engaged in specific industry codes (NAICS 3111-3399 or 5112). The exemption is in effect from January 1, 2017, to January 1, 2022. It also includes provisions for an exemption certificate and requires the Legislative Analyst's Office to study the exemption's impact on employment, facility location, and capital investment by January 1, 2019. Importantly, this bill repeals previous tax credits related to these activities, indicating a shift from a tax credit system to a direct exemption.