Abatements are a necessary tool

To the editor:

What did the recent agriculture tax abatements do for Jay County’s taxes? 

What kind of an investment qualifies and what are the particulars of this abatement?

First of all, only real estate qualifies. Equipment does not. The last time I checked, the value of the equipment that is going into these buildings is equal to the cost of the buildings. Thus, the investments or cost of the project is double what they are getting an abatement on, which means they begin paying personal property taxes on the equipment the first year.

Now, how long are these investments and how do they work? The large investment is for five years, and no taxes are paid the first year. The second year, 20 percent of the tax is paid, and the third year 40 percent is paid. The abatement ends the fifth year, with the full tax paid the sixth year.

The smaller abatement is for three years. Thus, the first year no tax is paid, the second year 33 percent of the tax is paid and by the fourth year the abatement is zero.

So, what did this cost the county in tax revenue over the entire five-year period on both abatements? Approximately $298,125.

Most likely it will be less than that because the abatement is based on assessed value, not actual cost, and assessed value will normally be less than cost.

So, after five years, annual additional tax revenue to Jay County from this investment will be approximately $180,742. If we estimate a 10-year life cycle, the additional revenue to the county will be $2.81 million.

Was this a good investment by the county? I will let you answer this.

Would the buildings have been built without the abatement? Probably yes.

However, the county offers tax abatements to most any business that qualifies and adds jobs. Most industries can get abatements on equipment and buildings, whereas agricultural can only get it on buildings.

Why offer tax abatement or job training monies or any other incentives? The answer is if you want to attract new and keep your present business and industry, it is a must. Every county in the state has some kind of a program to attract new business. Some counties will go out 20 years on abatements. Jay County limits ours to 10 years.

Simply, if we want our county to grow and prosper, we must have something to attract new and retain our present business and industry. Since we do not have a four-lane highway running through our county and we are not located close to an interstate, this is a very effective tool Jay County can use to attract and retain business.

Rex Journay

Rural Bryant