HOUSE BILL No. 6052 September 16, 1998, Introduced by Rep. Profit and referred to the Committee on Tax Policy. A bill to amend 1975 PA 228, entitled "Single business tax act," (MCL 208.1 to 208.145) by adding section 39c. THE PEOPLE OF THE STATE OF MICHIGAN ENACT: 1 SEC. 39C. (1) FOR TAX YEARS THAT BEGIN AFTER DECEMBER 31, 2 1998, A QUALIFIED TAXPAYER THAT OPERATES AT LEAST 1 MANUFACTURING 3 FACILITY IN THIS STATE MAY CLAIM A CLEAN MANUFACTURING INVESTMENT 4 CREDIT CALCULATED UNDER SUBSECTION (2) AND A MATERIAL SUBSTITU- 5 TION EXPENSE CREDIT CALCULATED UNDER SUBSECTION (5) AGAINST THE 6 TAX IMPOSED UNDER THIS ACT IN THE YEAR IN WHICH THE PRODUCTION 7 PROCESS REDESIGN OR OPERATIONAL IMPROVEMENT THAT FORMS THE BASIS 8 OF THE CLEAN MANUFACTURING INVESTMENT CREDIT OR MATERIAL SUBSTI- 9 TUTION EXPENSE CREDIT FIRST BECOMES OPERATIONAL AT THE QUALIFIED 10 TAXPAYER'S MANUFACTURING FACILITY IN THIS STATE. 06384'98 RJA 2 1 (2) A CLEAN MANUFACTURING INVESTMENT CREDIT UNDER THIS 2 SECTION IS CALCULATED AS FOLLOWS: 3 (A) DETERMINE THE CERTIFIED COST OF THE CLEAN MANUFACTURING 4 INVESTMENT. 5 (B) MULTIPLY THE COST DETERMINED UNDER SUBDIVISION (A) BY 6 30%. 7 (C) MULTIPLY THE AMOUNT DETERMINED UNDER SUBDIVISION (B) BY 8 EITHER OF THE FOLLOWING AS APPROPRIATE: 9 (i) THE PERCENTAGE, AS CERTIFIED BY THE BOARD, BY WHICH 10 TOXIC MATERIALS ARE REDUCED BY MEANS OF THE CLEAN MANUFACTURING 11 INVESTMENT. 12 (ii) THE PERCENTAGE, AS CERTIFIED BY THE BOARD, BY WHICH 13 ENVIRONMENTAL WASTE IS REDUCED BY MEANS OF THE CLEAN MANUFACTUR- 14 ING INVESTMENT. 15 (3) A CLEAN MANUFACTURING INVESTMENT CREDIT IS ALLOWED ONLY 16 AS APPROVED BY THE BOARD AND FOR AN INVESTMENT MADE VOLUNTARILY 17 BY THE QUALIFIED TAXPAYER AND IS NOT ALLOWED FOR AN INVESTMENT 18 THAT IS THE RESULT OF AN ENFORCEMENT ACTION, A NEGOTIATION SET- 19 TLEMENT, OR AN ORDER OF A FEDERAL OR STATE AGENCY OR COURT. 20 (4) THE BOARD SHALL CERTIFY THAT A QUALIFIED TAXPAYER'S 21 CLEAN MANUFACTURING INVESTMENT MAY BE USED TO CALCULATE A CREDIT 22 UNDER THIS SECTION IF THE BOARD DETERMINES THAT, BEFORE THE QUAL- 23 IFIED TAXPAYER IMPLEMENTS A PRODUCTION PROCESS REDESIGN OR AN 24 OPERATIONAL IMPROVEMENT, THE QUALIFIED TAXPAYER OBTAINED VERIFI- 25 CATION FROM THE DEPARTMENT OF ENVIRONMENTAL QUALITY OF ALL OF THE 26 FOLLOWING: 06384'98 3 1 (A) THE CLEAN MANUFACTURING INVESTMENT WILL REDUCE THE USE 2 OF TOXIC MATERIAL OR REDUCE AN ENVIRONMENTAL WASTE. 3 (B) THE QUALIFIED TAXPAYER'S ESTIMATES OF THE PERCENTAGE OF 4 REDUCTION IN THE USE OF A TOXIC MATERIAL OR PRODUCTION OF ENVI- 5 RONMENTAL WASTE THAT WILL RESULT FROM THE CLEAN MANUFACTURING 6 INVESTMENT. 7 (C) THE QUALIFIED TAXPAYER'S ESTIMATES OF THE COST THAT WILL 8 BE INCURRED TO IMPLEMENT PRODUCTION PROCESS REDESIGN OR OPER- 9 ATIONAL IMPROVEMENT THAT WILL REDUCE THE USE OF A TOXIC MATERIAL 10 OR AN ENVIRONMENTAL WASTE BASED ON A MEASUREMENT OF TOXIC MATERI- 11 ALS OR ENVIRONMENTAL WASTE PER UNIT OF PRODUCTION AND IN CON- 12 FORMITY WITH STANDARDS APPROVED BY THE DEPARTMENT OF ENVIRONMEN- 13 TAL QUALITY. 14 (D) THE QUALIFIED TAXPAYER MADE OUT-OF-POCKET PAYMENTS. 15 (E) THE CLEAN MANUFACTURING INVESTMENT RESULTED DIRECTLY 16 FROM THE PROCESS REDESIGN OR OPERATIONAL IMPROVEMENTS THAT ARE 17 USED IN A SPECIFIC PRODUCTION PROCESS AT A MANUFACTURING FACILITY 18 AND THAT REDUCED THE USE OF TOXIC MATERIALS OR ENVIRONMENTAL 19 WASTE BY MEANS OF A CLEAN MANUFACTURING INVESTMENT BASED ON A 20 MEASUREMENT OF THE AMOUNT OF TOXIC MATERIALS OR ENVIRONMENTAL 21 WASTE PER UNIT OF PRODUCTION AND IN CONFORMITY WITH STANDARDS 22 APPROVED BY THE DEPARTMENT OF ENVIRONMENTAL QUALITY. 23 (F) THE QUALIFIED TAXPAYER HAS APPLIED TO THE BOARD FOR CER- 24 TIFICATION OF ELIGIBILITY FOR THE CREDITS ALLOWED UNDER THIS 25 SECTION. 26 (5) A MATERIAL SUBSTITUTION EXPENSE CREDIT UNDER THIS 27 SECTION IS CALCULATED AS FOLLOWS: 06384'98 4 1 (A) DETERMINE THE ADDITIONAL COST TO PURCHASE A MATERIAL 2 THAT IS SUBSTITUTED FOR A TOXIC MATERIAL. 3 (B) MULTIPLY THE AMOUNT DETERMINED UNDER SUBDIVISION (A) BY 4 30%. 5 (6) THE BOARD SHALL CERTIFY THAT A QUALIFIED TAXPAYER'S 6 MATERIAL SUBSTITUTION EXPENSE MAY BE USED TO CALCULATE A CREDIT 7 UNDER THIS SECTION IF THE BOARD DETERMINES ALL OF THE FOLLOWING: 8 (A) BEFORE THE QUALIFIED TAXPAYER BEGAN THE MATERIAL SUBSTI- 9 TUTION PROJECT, THE QUALIFIED TAXPAYER OBTAINED VERIFICATION FROM 10 THE DEPARTMENT OF ENVIRONMENTAL QUALITY OF ALL OF THE FOLLOWING: 11 (i) THE MATERIAL SUBSTITUTE IS NONTOXIC OR LESS TOXIC THAN 12 THE TOXIC MATERIAL FOR WHICH IT IS SUBSTITUTED. 13 (ii) THE MATERIAL SUBSTITUTION EXPENSE WILL RESULT IN A 14 REDUCTION IN THE USE OF A TOXIC MATERIAL BASED ON A MEASUREMENT 15 OF THE REDUCTION IN TOXICITY IN CONFORMITY WITH THE GUIDELINES 16 ESTABLISHED BY THE DEPARTMENT OF ENVIRONMENTAL QUALITY. 17 (iii) THERE IS AN ESTIMATE BY THE QUALIFIED TAXPAYER OF ANY 18 ADDITIONAL COST THAT THE QUALIFIED TAXPAYER WILL INCUR TO SUBSTI- 19 TUTE A MATERIAL FOR THE TOXIC MATERIAL. 20 (B) THE QUALIFIED TAXPAYER PAID OUT-OF-POCKET EXPENSES FOR 21 MATERIAL SUBSTITUTION IN THE TAX YEAR. 22 (C) THE MATERIAL SUBSTITUTION EXPENSE DIRECTLY RESULTED FROM 23 THE ADDITIONAL COSTS OF SUBSTITUTING A MATERIAL FOR A TOXIC MATE- 24 RIAL IN A SPECIFIC PRODUCTION PROCESS AT A MANUFACTURING 25 FACILITY. 26 (D) THE QUALIFIED TAXPAYER APPLIED TO THE BOARD FOR THE 27 CREDIT CERTIFICATION ON A FORM PRESCRIBED BY THE BOARD. 06384'98 5 1 (E) THE QUALIFIED TAXPAYER HAS NOT RECEIVED CERTIFICATION 2 UNDER THIS SECTION FOR THE SAME MATERIAL SUBSTITUTION EXPENSE OR 3 PROJECT. 4 (F) THE QUALIFIED TAXPAYER PAID ALL APPLICABLE FEES. 5 (7) THE BOARD SHALL CERTIFY THAT A QUALIFIED TAXPAYER'S 6 MATERIAL SUBSTITUTION EXPENSE IS ELIGIBLE FOR THE CREDIT UNDER 7 THIS SECTION IF THE QUALIFIED TAXPAYER PROVIDED ALL INFORMATION 8 THAT THE BOARD DETERMINED WAS NECESSARY TO CALCULATE THE MATERIAL 9 SUBSTITUTION EXPENSE CREDIT UNDER THIS SECTION AND TO DETERMINE 10 WHETHER A MATERIAL SUBSTITUTION EXPENSE IS ELIGIBLE FOR USE TO 11 CALCULATE A CREDIT UNDER THIS SECTION. 12 (8) TOTAL CREDITS FOR ALL QUALIFIED TAXPAYERS UNDER THIS 13 SECTION SHALL NOT EXCEED $10,000,000.00 FOR EACH STATE FISCAL 14 YEAR AND SHALL NOT EXCEED $200,000.00 FOR ANY 1 QUALIFIED TAX- 15 PAYER FOR A TAX YEAR. 16 (9) THE CLEAN MANUFACTURING CREDIT AND MATERIAL SUBSTITUTION 17 CREDIT BOARD IS ESTABLISHED IN THE DEPARTMENT OF ENVIRONMENTAL 18 QUALITY. THE BOARD SHALL DETERMINE ELIGIBILITY FOR THE CREDITS 19 ALLOWED UNDER THIS SECTION AND ASSURE THAT THE TOTAL AMOUNT OF 20 THE CREDITS ALLOWED UNDER THIS SECTION DO NOT EXCEED THE MAXIMUM 21 STATEWIDE CREDIT AMOUNT AS PROVIDED IN SUBSECTION (8). THE BOARD 22 SHALL CONSIST OF ALL OF THE FOLLOWING MEMBERS: 23 (A) THE DIRECTOR OF THE DEPARTMENT OF ENVIRONMENTAL QUALITY 24 OR HIS OR HER DESIGNEE. 25 (B) THE DIRECTOR OF THE DEPARTMENT OF CONSUMER AND INDUSTRY 26 SERVICES OR HIS OR HER DESIGNEE. 06384'98 6 1 (C) THE DIRECTOR OF THE DEPARTMENT OF MANAGEMENT AND BUDGET 2 OR HIS OR HER DESIGNEE. 3 (D) THE DIRECTOR OF THE DEPARTMENT OF TREASURY OR HIS OR HER 4 DESIGNEE. 5 (E) THE DIRECTOR OF THE DEPARTMENT OF COMMUNITY HEALTH OR 6 HIS OR HER DESIGNEE. 7 (10) THE BOARD SHALL APPROVE APPLICATIONS FOR CREDITS 8 ALLOWED UNDER THIS SECTION IN THE ORDER IN WHICH APPLICATIONS ARE 9 RECEIVED IN EACH STATE FISCAL YEAR. IF THE TOTAL CREDITS APPLIED 10 FOR IN A STATE FISCAL YEAR EXCEED THE MAXIMUM AMOUNT FOR THE 11 STATE FISCAL YEAR AS PROVIDED IN SUBSECTION (8), APPLICATIONS 12 RECEIVED AFTER THE MAXIMUM AMOUNT HAS BEEN AWARDED SHALL NOT BE 13 APPROVED. THE BOARD MAY GIVE PREFERENCE IN A SUBSEQUENT STATE 14 FISCAL YEAR TO APPLICATIONS THAT ARE RECEIVED AFTER THE MAXIMUM 15 AMOUNT UNDER SUBSECTION (8) IS REACHED IN A PREVIOUS YEAR. 16 (11) IF THE CREDIT ALLOWED UNDER THIS SECTION FOR THE TAX 17 YEAR AND ANY UNUSED CARRYFORWARD OF THE CREDIT ALLOWED BY THIS 18 SECTION EXCEED THE QUALIFIED TAXPAYER'S TAX LIABILITY FOR THE TAX 19 YEAR, THAT PORTION THAT EXCEEDS THE TAX LIABILITY FOR THE TAX 20 YEAR SHALL NOT BE REFUNDED BUT MAY BE CARRIED FORWARD TO OFFSET 21 TAX LIABILITY IN SUBSEQUENT TAX YEARS FOR 2 YEARS OR UNTIL USED 22 UP, WHICHEVER OCCURS FIRST. 23 (12) AS USED IN THIS SECTION: 24 (A) "BOARD" MEANS THE CLEAN MANUFACTURING CREDIT AND MATE- 25 RIAL SUBSTITUTION CREDIT BOARD ESTABLISHED IN SUBSECTION (9). 26 (B) "CLEAN MANUFACTURING INVESTMENT" MEANS AN EXPENDITURE 27 THAT MEETS ALL OF THE FOLLOWING CRITERIA: 06384'98 7 1 (i) REDUCES THE USE OF A TOXIC MATERIAL OR REDUCES AN 2 ENVIRONMENTAL WASTE. 3 (ii) WILL REDUCE THE USE OF A TOXIC MATERIAL BY MEANS OF 4 CLEAN MANUFACTURING BASED ON A DEPARTMENT OF ENVIRONMENTAL QUAL- 5 ITY APPROVED MEASUREMENT OF THE TOXICITY AND AMOUNT OF TOXIC 6 MATERIALS OR ENVIRONMENTAL WASTE PER UNIT OF PRODUCTION. 7 (C) "QUALIFIED TAXPAYER" MEANS A TAXPAYER THAT HAS BOARD 8 CERTIFICATION OF ALL OF THE FOLLOWING: 9 (i) THAT THE TAXPAYER IS ELIGIBLE FOR THE CREDITS ALLOWED 10 UNDER THIS SECTION. 11 (ii) A DESCRIPTION OF THE ACTIVITY OR EXPENSE THAT IS THE 12 BASIS FOR THE CREDIT AND CERTIFICATION THAT THE ACTIVITY OR 13 EXPENSE IS ELIGIBLE AS A BASIS FOR THE CREDIT ALLOWED UNDER THIS 14 SECTION. 15 (iii) THE TOTAL AMOUNT OF THE EXPENDITURE THAT IS ELIGIBLE 16 FOR THE CREDIT. 17 (iv) FOR A CLEAN MANUFACTURING INVESTMENT CREDIT, THE PER- 18 CENTAGE OF THE ENVIRONMENTAL WASTE OR TOXIC MATERIAL REDUCED BY 19 MEANS OF THE CLEAN MANUFACTURING INVESTMENT. 06384'98 Final page. 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