THE VIRGINIAN-PILOT
Copyright (c) 1997, Landmark Communications, Inc.
DATE: Thursday, February 20, 1997 TAG: 9702200052
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
SOURCE: BY KAREN JOLLY DAVIS, STAFF WRITER
DATELINE: RICHMOND LENGTH: 42 lines
Spaceport Virginia got a big boost from the General Assembly this session when both chambers voted unanimously to exempt its business from state sales and use taxes.
Billie Reed, executive director of the Virginia Commercial Space Flight Authority, said the tax exemptions are necessary for the spaceport to be competitive. Launch facilities in California and Florida enjoy similar tax breaks.
``We would have been at a very large disadvantage without it,'' Reed said.
The legislation exempts nearly everything associated with space flight - rockets, fuel, payload processing equipment, satellites, launch towers.
``You're talking about sales tax on something that might be worth $20 (million) or $30 million,'' said Reed.
Companies get the tax break if they work with the spaceport, even if they don't launch at Wallops Island on the Eastern Shore. That encourages companies to conduct their space business in Virginia, Reed said.
There is a time limit built into the legislation. If Gov. George F. Allen signs the bill as expected, the exemptions will go into effect July 1 and be in force until June 30, 2001. At that point, the General Assembly can dump or re-establish the exemptions.
How many tax dollars would Virginia lose as a result of these exemptions?
``This business is new business,'' said Reed. ``It's hard to couch it as a tax loss, because you didn't have it before.''
For EER Systems, the company that launched the ill-fated Conestoga, the tax exemptions come too late. Insiders say EER was socked with a hefty sales tax bill for the rocket, even though it exploded. The state considers a rocket launch as a point of sale.
Hugh Cook, EER launch services manager, would not confirm the number or comment on the situation.
``We're presently engaged on a disagreement about that,'' said Cook. ``It hurt, and it came after the program was over and all the money was spent.''
He said a tax exemption in the future would make his company more competitive.
``It means more flights out of Wallops,'' said Cook.