Pritzker proposes $300 million in tax breaks for certain business sectors

Illinois State Capitol in Springfield. (FILE-WILL STEVENSON/WGIL)

The Pritzker administration is proposing a huge package of tax incentives related to the electric vehicle sector.

The incentives are worth about $300 million and will cover electric vehicle makers producing hovercraft and microchips.

Illinois Manufacturers Association President Mark Denzler said if the company doesn’t fulfill its end of the agreement, it will have to pay back the bonuses.

“All of these contracts have clawback provisions, so they don’t write a check in advance. They must meet certain capital goals and employment goals, and if those are not met, companies are required to repay that money,” Denzler said during a House committee hearing Tuesday.

The legislation in House Bill 817 also includes a five-year extension of the R&D tax credit.

“Research and development is critical to the success of our state’s manufacturing sector, and manufacturers are constantly creating new products and improving existing ones,” Denzler said.

The Department of Commerce and Economic Opportunity estimates the incentives could generate more than $20 billion in new state revenues and create thousands of jobs over the next 30 years.

State Rep. C. D. Davidsmeyer, R-Jacksonville, said the governor is ignoring companies that have already established operations in Illinois.

“I don’t think we’re doing enough to support small businesses because it’s small businesses that pay for it,” Davidsmeyer said. “Most of them have such a high threshold that the average person can’t access the almost $300 million in tax breaks that we’re seeing here,” Davidsmeyer said.

State Rep. Ryan Spain, R-Peoria, said he supports economic growth, but the state shouldn’t choose who gets tax breaks.

“If we are to raise corporate taxes and then offer some companies $300 million in incentives, that is bad news,” Spain said. “This is a bad faith way of running our government in Illinois.”

Pritzker’s budget proposal angered the business community with two proposals, including increasing the upper limit on deductions corporations can deduct for net operating losses and a policy change that allows retailers to keep a portion of the sales tax collected when shoppers buy products. This is intended to serve as a refund to retailers collecting tax on behalf of the state. Pritzker proposes limiting the amount of sales tax that retailers can withhold to $1,000.

The tax incentive passed the House Executive Committee and will go to a vote in the House.