SAN FRANCISCO (KCBS/AP) -- The tax break deal offered to electric carmaker Tesla is being hotly debated amongst small business owners.
The financial break, announced Monday, allows Tesla to avoid paying state sales tax on equipment that it buys to build its Model S, which will save the company 7 percent to 9 percent on each purchase. The deal was announced shortly after state lawmakers learned that the Silicon Valley-based company intended to build its second-generation vehicle in New Mexico.
Dr. T.J. Rogers, CEO of Cypress and chairman of Sunpower, moved his wafer manufacturing from California to Texas and Minnesota to reduce costs. He said he is outraged that the state would not offer the same type of deal for small businesses like his.
“I can’t afford to run a plant here [in California] because every time I put in a new piece of equipment and try to upgrade the plant I have to pay an extra six percent on top of what the equipment costs.”
State Treasurer Bill Lockyer said a targeted mechanism is in place for the government to offer incentives to businesses they want to keep in the state. However, there are several competing issues at hand.
“The debate always is: how much money can you use for business inducement that then is money not put into the public schools, or healthcare, or the prison system or some other program. … [and] when does it become just a gift for behavior that would have happened anyhow, or does it really bring a business to California or have it really expand?”
For small business owners like Rogers, he says that the state should have a consistent policy when offering incentives to any company.
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KCBS' Margie Shafer reports
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