Environmental managers are not often popular with company CFO’s as more often than not, their proposed projects to install pollution control measures involve large expenditures with little prospect of cost-recovery. However, a review of various state decisions on what constitutes “pollution-control” may enable the thrifty EHS manager to soften the blow with creative mechanisms such as pollution control tax credits.
Virtually all industrialized states have enacted exemptions or credits from sales and use taxes or property taxes, or both, for expenditures made for pollution control. While not all states define pollution control equipment in exactly the same way, examples of what one state has accepted as pollution control are often persuasive when applying for such credits or exemptions in another state with similar definitions. In Louisiana, the pollution control tax exemption applies to sales and use taxes. Louisiana requires that the equipment be required by state or federal law or that it results in a net reduction in volume or toxicity of a pollutant. If equipment is eligible, one can obtain an exemption before purchase or obtain a refund after the purchase. The Louisiana Department of Revenue has guidance available on its website for determining what projects may qualify. Louisiana’s exemption is discussed at p. 64-65 of this publication.
Unfortunately, Louisiana does not have a preapproved list of equipment as do several other states. It is interesting to note that monitoring equipment, including leak detection equipment, is included in some of these. For information on what has been approved as pollution control equipment, visit these Websites from Texas, Michigan, Iowa and Mississippi.