Tax-zone program gets nod

Senate panel OKs extension
The Arizona Republic
Thursday, March 9, 2006
Mary Jo Pitzl

Despite some concerns about the tax breaks it offers, Arizona's Enterprise Zone program appears headed for a five-year extension.

That means manufacturing businesses looking to locate within designated areas of the state will qualify for income-tax breaks that amount to $3,000 per employee, up to 200 workers, for three years.

Businesses also get a lower property-tax assessment for five years.

The idea is to attract start-ups as well as business expansion to areas with high unemployment and high poverty rates. Now, there are 42 businesses in the state's 26 enterprise zones.

On Wednesday, the Senate Commerce and Economic Development Committee voted 4-2 to extend the program through June 30, 2011.

The program's property-tax breaks drew opposition from Kevin McCarthy, executive director of the Arizona Tax Research Association.

He argued that the lower amount collected from businesses in enterprise zones increases the burden on all other businesses. Businesses are taxed at 24.5 percent of their assessed value; enterprise-zone businesses are taxed at 5 percent of their value for five years.

State Sen. Ken Cheuvront, a Phoenix Democrat, called the tax breaks bad public policy.

"I'm against any kind of incentives," he said.

But most panel members like the policy; so do members of the House of Representatives, who last month voted 52-0 to pass House Bill 2686.

The bill also has the support of various business groups, from the Arizona Technology Council to the Arizona Association of Industries.