To view our article on how the bill will directly encourage food production and consumption, click here.
Other benefits for the food industry of the American Recovery and Reinvestment Act of 2009, which injects $787bn into the US economy, are linked to the plan’s focus on tax incentives for businesses and its infrastructure funding. They include provisions that encourage the purchase of new equipment, the installation of green technologies and the transport of product across the country.
New equipment bonus
Under the Extension of Bonus Depreciation provision, the bill will allow businesses to immediately write off 50 percent of the cost of depreciable property.
Estimated to cost $5.1bn, this provision is an extension of a decision by Congress last year to allow businesses to recover costs of capital expenditures made in 2008 faster than the ordinary depreciation schedule would allow.
Extended into 2009, the benefit could be used for the purchase of equipment, computers, solar panels or wind turbines, for example.
“In theory, more small companies that are in a position to reinvest in equipment, machinery, etc. would be more likely to do so, because of the tax relief under this provision. Of course business owners need to speak with their accountants to determine their eligibility for these new provisions,” said Daniel Fabricant PhD, vice president of scientific and regulatory affairs at the Washington DC-based Natural Products Association, a dietary supplement trade group.
Another indirect benefit of the stimulus bill is linked to the $64.1bn it will inject into infrastructure.
The funding will be used for a range of transportation projects including construction of highways, bridges, airports and railways.
The resulting improvements are expected to improve the ability to move product across the country – an impact of varying benefit for different companies within the food industry.
“Obviously this impact is greater on a local basis,” explained Roger Szemraj, counsel at law firm Olsson Frank Weeda, which specializes on food and drug issues.
“Some producers and processors will benefit more than others as a result of the geographic diversity. But many businesses do say that better access to quality roads and interchanges reduces their transportation costs and improves their financial viability,” Szemraj told NutraIngredients-USA.com.
To view a full summary of the bill’s provisions from the House Ways & Means Committee, click here.