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BILL # HB 2639 |
TITLE: TPT; exemption; qualifying equipment; extension |
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SPONSOR: Griffin |
STATUS: House Engrossed |
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PREPARED BY: Nate Belcher |
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The House Engrossed version of HB 2639 would extend the existing Transaction Privilege Tax (TPT) and Use Tax exemptions for qualifying equipment purchased by a certified Healthy Forest Enterprise from December 31, 2026 to December 31, 2028. Qualifying equipment includes machinery used to harvest or process materials from qualifying forest thinning projects.
Estimated Impact
Due to lack of data on the current use of the sales tax exemption on qualifying equipment purchased by Healthy Forest Enterprises, we cannot determine the fiscal impact of extending the current exemption to December 31, 2028. We would note, however, that since the current use of the exemption is already reflected in our revenue base under the January Baseline, we expect the impact of the bill to be limited.
The Arizona Commerce Authority (ACA) administers five tax incentives related to the Arizona Department of Forestry and Fire Management's forest thinning operations, collectively known as the Healthy Forest Incentive Program (HFIP). Besides the TPT and Use Tax exemptions for qualifying forest product processing equipment, the incentive program also includes income tax credits, reduced property tax assessments and reduced tax on use fuel.
ACA publishes an annual report that shows the total amount of awards issued under all five HFIP incentives combined by fiscal year. According to information contained in these reports, the total dollar value of all five incentives combined has varied from a low of $11,997 in FY 2013 to a high of $1,046,304 in FY 2022. The most recent report indicates that 8 businesses in the state were certified as Healthy Forest Enterprises in FY 2024 and the dollar value of all incentives received by them in FY 2024 totaled $724,101.
According to ACA, they do not have disaggregated data that shows the separate use for each of the five tax incentives under the Healthy Forest Program. For this reason, we are not able to determine how much of the current dollar value of the incentive program is specifically attributable to the TPT and Use Tax exemption on qualifying equipment.
Local Government Impact
Due to lack of data on the current use of the exemption, we cannot determine the fiscal impact on local governments.
3/10/25