URGENT ACTION NEEDED TO STOP GROSS RECEIPTS TAX (GRT)

Call your State Representatives and Senators now and help defeat the Gross Receipts Tax (GRT).  It is absolutely imperative that you inform them how detrimental this tax scheme may be to your business, your industry and the state’s economic future and to secure a commitment to oppose the GRT.   This will tax manufacturers, mining, agriculture, retailers, construction and wholesalers at 0.5% of their total revenues while all others, i.e. services like law firms and consulting firms, would be taxed at 1.8%.  Ask legislators for a commitment to vote against the taxes the governor is seeking. If you are successful in obtaining a legislator’s commitment that he or she will not vote to implement a gross receipts tax, it is important that you contact CICI with this information.  

If you do not know who your State Representative and Senator is, follow this link and enter your facilities address and contact them in their district offices: http://www.elections.state.il.us/DistrictLocator/AddressSearch.aspx

This will be the most important issue for the chemical industry this year.  CICI needs your help in defeating this proposal.  The following are quick talking points for you to use with your elected officials:  

• This is the largest tax increase in the history of the state. 

• Governor Blagojevich has embraced this type of tax because he thinks that corporations in this state pay little or no taxes.  What the Governor never mentions, however, is that Illinois’ businesses also shell out billions of dollars every year through numerous other taxes and fees including franchise taxes, utility taxes, property taxes, sales taxes, and certain fees that fund entire state agencies like the IEPA.  What the Governor also does not take into account is the net-loss carryforward that allows businesses to carry forward their losses for a number of years.  In 2004, many businesses in this state were still experiencing the downturn in the economy after 9/11, probably not making much, if any, profit, and were carrying forward their losses from previous years.  

• Gross receipts taxes are not based on ability to pay, but are owed whether or not a business is profitable.

• A gross receipts tax violates fundamental principles of tax policy and would directly and
 negatively impact Illinois' economy by frustrating job growth and economic development in
 addition to increasing the cost of goods sold to Illinois consumers.

• Gross receipts taxes "pyramid" the imposition of tax. For example, in a production process that
 involves six steps from the procurement of raw materials to the final sale to the consumer, if each
 step were performed by a different Illinois business, the final product would have been subjected
 to six levels of gross receipts tax. This pyramiding results in an effective tax rate that can be
 significantly more than the statutory tax rate.

• A gross receipts tax will make Illinois products and services more expensive for Illinois consumers.
 
The Chemical Industry Council of Illinois (CICI) has already begun work with other business groups to oppose the Governor’s tax proposals.  CICI needs to know how this tax if going to affect your particular company and needs your feedback. Please contact Brad Babcook at bbabcook@cicil.net or 217/522-5805.  All replies will be kept strictly confidential.   

TRIAL LAWYERS REFUSE TO NEGOTIATE ON BILL

The Illinois Trial Lawyers Association (ITLA) made it abundantly clear this week that they will aggressively push their coveted piece of legislation, SB 1296 (Cullerton, D-Chicago), after they refused to negotiate any compromise.  This legislation would provide that the apportionment of fault under joint liability only applies to the parties still remaining in the case at the time that a final determination is made. There is only one purpose for this bill: to enable personal injury trial lawyers to collect money from the defendant with the deepest pocket in a personal injury case, without regard to which of multiple defendants might be most at fault.  The trial lawyers can settle with those with the least financial resources -- even if they are most at fault -- and go after the defendant with the most financial resources, even if that defendant had little fault. 

This is a very important issue for CICI.  As such, we need our members help in defeating this proposal.  Please contact your state senator and convey to them how unfair this proposal is. If you do not know how your state senator is, follow this link and enter your facility’s address and contact them in their district office: http://www.elections.state.il.us/DistrictLocator/AddressSearch.aspx

BILL TO HIKE REAL ESTATE TAXES TO HIT BUSINESSES HARD

This proposal, SB 445 (Martinez, D-Chicago), would enact one of the largest real estate transfer tax hikes to abundantly fund state housing projects and open space lands acquisition.  This is a $100 million tax hike on anyone in the state that sells real estate and would be disproportionately paid for by the business community.  For properties with a sales price of $500,000 or more, the incremental value would be taxed at a substantially higher rate, as follows:

 The value between $500,000 and $1,000,000 would be taxed at a rate of $3 per $1,000;

 The value between $1,000,001 and $3,000,000 would be taxed at a rate of $7 per $1,000;

 The value over $3 million would be taxed at a rate of $10 per $1,000.
    
In the last few years the current transfer taxes to the state have grown by 63%, garnering over $80 million in new money during this time, which already had an annual base of $71 million starting with Fiscal Year 2003.  Further, not all of this money went to fund these seemingly worthwhile programs but were diverted to the General Revenue Fund to the tune of $40 million.

This bill was muscled out of the Senate Revenue Committee on a vote of 6 ”yes” to 3 ”no”.  The bill now awaits further action on the Senate Floor.   CICI is working with the rest of the business community to stop this tax increase. 

COMMITTEE ACTION

Biomonitoring Feasibility Study
This measure, HB 680 (Nekritz, D-Northbrook), sets out for the University of Illinois at Chicago, the Great Lakes Center for Occupational and Environmental Safety and Health (Center), to conduct an environmental contaminant biomonitoring feasibility study that proposes the best ways to monitor the presence and concentration of designated chemicals in the bodies of the people of this State.  The bill also provides for a Scientific Guidance Panel that will be composed of 11 members appointed by the Directors of Public Health and the IEPA and provide guidance to the Center.  After 2 years, the Center would submit a report to the Governor and the General Assembly containing findings of the feasibility study and include recommended activities and estimated costs of establishing an Illinois Environmental Contaminant Biomonitoring Program.

While this bill is significantly different than what was introduced earlier this year, CICI is currently opposed to this piece of legislation and is working with the sponsor under an agreement to not move the bill any further until differences can be worked out.  CICI is working closely with the American Chemistry Council (ACC) to suggest language changes that will make this feasibility study much more palatable.

The bill passed out of the House Environment & Energy Committee this week.   

Grief Damages
This is a trial lawyer bill, HB 1798 (Fritchey, D-Chicago), aimed at increasing award damages for grief, sorrow and mental suffering in wrongful death cases.  It passed the House Judiciary – Civil Law Committee this week with 8 “yes” votes and 6 “no” votes and will move to the House Floor for further consideration.  This legislation would not only add damages to the Wrongful Death Act, but in cases where contributory negligence is a factor, the legislation would redistribute any reduction of a contributorily negligent party's damage award to dependents of the decedent. Under current law, reductions based on contributory fault are not paid to anyone.

CICI will be working closely with the Illinois Civil Justice League (ICJL) in defeating this and a few other costly proposals that aim to further erode the state’s system of civil justice for the sake of lining trial lawyers’ pockets.  

Trucking Fee – Biodiesel Use
This proposal, HB 3667 (Moffitt, R-Galesburg), provides that, beginning January 1, 2008 and through December 31, 2013, the owner of a vehicle for which biodiesel has been purchased during the previous registration year is entitled to a reduction of the commercial distribution fee for that vehicle and sets forth the amount of the reduction based upon the amount of biodiesel purchased. 

This fee was established as part of Governor Blagojevich’s first budget in which many new and increased taxes and fees were enacted.  This bill unanimously passed the House Environment and Energy Committee this week and awaits further action on the House Floor.    

R & D Tax Credit
This measure, SB 1180 (Link, D-Lake Bluff), creates an alternate research and development credit for taxpayers who have conducted business activities in each of the 3 preceding taxable years at 12% of: (1) the amount of qualified research expenditures made in the current taxable year; less (2) 50% of the average of the qualified research expenditures made for the 3 preceding taxable years.  The amount of the credit for taxpayers who have not conducted business activities in each of the 3 preceding taxable years is 6.5% of the qualified research expenditures made in the current taxable year.  These credits may be carried forward for 5 years.

This bill unanimously passed the Senate Revenue Committee this week and awaits further action on
the Senate Floor.  CICI supports this legislation.
 
Advanced Sciences Zones - Tax Credits
This proposal, SB 1578 (Bond, D-Grayslake) creates the Advance Science Zones Act to set forth procedures for the Department of Commerce and Economic Opportunity (DCEO) to certify areas in the state as Advanced Science Zones that includes a loan program, a financial-assistance program, a transferable investment tax credit, and a tax-deduction certification.

This bill is seen as a step in the right direction for the chemical industry and CICI supported its passage.  The bill now moves to the Senate Floor where it awaits further action 

Gas Tax Emption for Manufacturing
CICI never thought this bill would ever see the light of day but passed the Senate Revenue Committee this week with 8 “yes” votes and only 1 “present” vote.  This bill, SB 1697 (Jacobs, D-East Moline) amends the Gas Use Tax Law and Gas Revenue Tax Act to provide that the tax is not imposed with respect to any use by most manufacturers including chemical, petroleum, paint, fertilizer, plastic, and photographic manufacturing.

CICI is very optimistic about this legislation and will aggressively work for its passage now that it awaits further action on the Senate Floor.    

LEGISLATIVE DAY APRIL 24

Mark your calendars and reserve your rooms.  CICI will be holding its Annual Legislative Day in Springfield, Tuesday, April 24, 2007, at the President Abraham Lincoln Hotel (formerly Renaissance Hotel), with an evening reception of legislators and key government officials at the Sangamo Club.  To register for the event, please go to: http://www.cicil.net/Flyers/Legislativeday07.html

Senate Environment and Energy Committee Chairman, Senator James Clayborne (D, E. St. Louis) will be the keynote speaker at the Legislative Luncheon. Senator Clayborne will discuss significant environment and energy legislation and issues of importance to Illinois’ chemical industry.

This event is a great opportunity to mingle and get to know the key people in state government, like members of the Illinois General Assembly, Constitutional Officers, IEPA officials, the members of the Pollution Control Board, and other key government officials.  At the 2006 reception, over 175 legislators and government officials attended. Come thank those elected officials who are friends of the chemical industry.

The President Abraham Lincoln Hotel has a discounted block of rooms reserved for CICI.  Reservations can be made by calling the hotel at 1-866-788-1860.  CICI’s block of rooms will be available until Monday, April 2, 2007, so please make your reservations accordingly.

Please note that the Chemical Industry Council of Illinois Legislator is not intended to convey legal advice or set forth all legal requirements applicable to particular circumstances.

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