Resource Manufacturing Tax Credit Passed as Part of the 2012-2013 Budget

On June 30^th, Pennsylvania passed the Resource Manufacturing Tax Credit (Tax Credit) as part of the 2012-2013 Budget. The Tax Credit was passed in order to attract Royal Dutch Shell, and future petrochemical companies to build ethane cracker plants in Pennsylvania. To qualify for the tax credit, a company must make a one billion dollar investment and create at least 2,500 new jobs. The Tax Credit authorizes a 5 cent per gallon tax credit for ethane bought in the manufacturing of ethylene between 2017 and 2042 for qualifying companies.

Unlike Governor Corbett’s original plan to have the tax credit capped at $66 million a year, there is no limit on the amount of tax credits a company can receive. The credits are only allowed to offset 20% of tax liability for the year. Unused credits can be sold, but they have to be exclusively offered to companies consuming ethylene or supplying ethane for 30 days before they can be offered to other companies. Up to 50% of taxes may be offset by credits that have been purchased but the credit cannot be resold.

Click here to read House Bill 761

Written by Joseph Negaard, Research Assistant
July 5, 2012