Governor Ernie Fletcher’s Communications Office
Governor Fletcher Signs Bill Providing Further Tax Relief for Businesses
House Bill 1 also provides additional tax incentives for FutureGen project
FRANKFORT, Ky. – Governor Ernie Fletcher, surrounded by legislators from the House and Senate, today signed into law a bill that will, once fully implemented, provide more than $41 million annually in tax relief to businesses across Kentucky. Governor Fletcher called legislators into session to pass tax relief legislation as part of the historical tax modernization bill first passed in 2005.
“I’m proud of the outstanding bipartisan support that helped make this bill law in five legislative days – a record for the shortest legislative session in Kentucky history,” said Governor Fletcher. “Our business community is the engine that drives our economy and providing this relief will place our commonwealth near the top of the list of business-friendly states. This sends the message that Kentucky, more than ever, is open for business.”
House Bill 1 provides immediate relief for approximately 70,000 businesses, roughly seven out of every eight business taxpayers, by accomplishing the following:
- Repeal the taxation of gross receipts and gross profits for companies with gross receipts or gross profits of $3 million or less. This provision, which will provide relief from the Alternative Minimum Calculation, goes into effect for the 2006 tax year.
- The legislation will preserve the reduction of the tax on corporate profits from 7 percent to 6 percent beginning January 1, 2007, helping attract and retain strong, profitable businesses in Kentucky.
- This legislation will treat the taxation of net income of pass-through entities like LLCs in the same way as federal law beginning with the 2007 tax year.
- House Bill 1 also provides an incentive package to lure the FutureGen project to Kentucky. The total incentive package is valued between $60 - $90 million. FutureGen is a $1 billion pilot project exploring the feasibility of using cutting edge technology to create the world’s first zero emissions power plant. Seven states, including Kentucky, are proposing 12 different sites.
“FutureGen could literally be the power plant of the future,” said Governor Fletcher. “The state that lands this project will be leading the charge in the quest for cleaner fuel sources. The world will be watching. Competition is intense, but Kentucky’s coal heritage and culture will help us compete on the world’s stage.”
The power plant is expected to create 1,500 construction jobs, with an estimated payroll of $250 million over four years. FutureGen is expected to create 150 high-tech, high paying permanent jobs.
The federal government, the FutureGen Industrial Alliance and several other nations are partners in the project. A short list of sites is expected this summer, with a final decision coming next year. The power plant is expected to be operational by 2012.