Suffolk County manufacturers can receive a sales-tax exemption of up to $100,000 on the purchase of equipment for making personal protective equipment and medicine, officials said.
The COVID-19 Sales Tax Relief Equipment Program was approved unanimously by the county’s Industrial Development Agency via a video conference on Tuesday. The COVID-19 exemption could potentially cover purchases made in a one-year period that are tied to the coronavirus pandemic, starting immediately.
The new program coincides with hospital systems facing shortages of PPE such as face masks and shields, gowns and gloves.
Businesses, large and small, have rushed to fill the void. D’Addario & Company Inc., a maker of musical instrument accessories in East Farmingdale, is turning out face shields. Automobile parts maker Long Island Racing LLC in Brentwood is producing masks, while Long Island Spirits in Baiting Hollow is mixing hand sanitizer instead of vodka and bourbon.
“I’ve been inspired to see local companies step up to the plate to develop and distribute the PPE supplies for our frontline workers,” said Suffolk County Executive Steve Bellone, referring to doctors, nurses and other essential personnel.
The COVID-19 sales-tax exemption is the first of its kind by an IDA in the state, according to Ryan M. Silva, executive director of the New York State Economic Development Council, which represents IDAs in Albany.
Still, some Suffolk lawmakers expressed concern about how the tax break will impact county finances, which were shaky before the coronavirus outbreak.
"These companies are going to make millions of dollars, they should be paying taxes," Legis. Robert Trotta (R-Fort Salonga), a critic of the IDA and Bellone, said on Tuesday. "I have little faith that the IDA's actions in response to this pandemic will result in anything more than a few opportunistic businesses benefiting at the taxpayers' expense."
Factories in Suffolk eligible for the sales-tax break include longtime PPE companies and those starting to make PPE, as well as drugmakers and producers of diagnostic tests, disinfectant, sterilizers and sanitizer machines, hospital equipment and some chemicals, according to IDA executive director Anthony J. Catapano.
“We are hopeful this added benefit will not only reduce the financial hardships businesses are experiencing, but also help the expeditious manufacturing and delivery of these critical supplies,” he said.
The IDA will charge no fees to companies applying for the COVID-19 sales-tax exemption. More information is available by emailing firstname.lastname@example.org.
Catapano said the exemption applies to new purchases of construction supplies, electrical connections, shelving and distribution equipment but not raw materials and operating expenses. It doesn’t apply retroactively or to production equipment, which is already exempt from sales tax in New York State.
He said a manufacturer would need to spend several million dollars to qualify for the full $100,000 sales-tax exemption. On Long Island, the sales tax is 8.625%. The break is capped at $100,000 to avoid a lengthy approval process that would include a public hearing and two votes by the IDA board, he said.
The IDA hopes to approve or deny applications within three days after the necessary paperwork has been submitted. The process “has been streamlined [because of the pandemic], so we can do this as quickly as possible,” said deputy executive director Kelly Morris.
Suffolk IDA’s COVID-19 tax break is modeled after a program the agency started to help businesses recover from superstorm Sandy in October 2012. Forty-four businesses saved a combined $321,000 in sales tax on the purchase of $16 million in construction materials, fixtures, equipment and supplies.
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