Victoria County OKs tax break for Caterpillar

Melissa Crowe By Melissa Crowe

Nov. 19, 2012 at 5:19 a.m.
Updated Nov. 20, 2012 at 5:20 a.m.

Victoria County companies importing goods from overseas now have an opportunity to cut and even eliminate some taxes, thanks to an international trade zone.

Victoria County Commissioners gave approval Monday to activating a 28-acre foreign-trade zone on U.S. Highway 59, near Victoria Regional Airport, for Caterpillar Inc.

This site includes 255,000 square feet of manufacturing, office and warehouse space with an improved laydown yard. The site is not yet activated.

County Judge Don Pozzi said the trade zone was part of the incentive used to attract the manufacturer.

The vote takes action on incentives the county guaranteed Caterpillar in the beginning, he said. The city gave its approval Nov. 13.

"We already said we'd do this - now's the time," Pozzi said.

Commissioner Gary Burns made a motion to activate the trade zone, and Commissioner Clint Ives seconded it.

The issue passed unanimously.

According to the Calhoun-Victoria Foreign-Trade Zone, Inc. website, these zones help U.S. businesses compete in the global market.

Foreign-trade zones assist in neutralizing U.S. tariff structures on products U.S. manufacturers use.

The primary manufacturing industries that benefit from these zones are oil refining, vehicles/automotive parts, consumer electronics and pharmaceuticals, according to the 2012 Texas Foreign-Trade Zone Report.

Logistics-related firms also benefit, as companies can use the zones for warehousing, inspection, labeling, salvaging and distribution. Retail trade is prohibited.

Victoria Economic Development Corp. President Dale Fowler said the Calhoun-Victoria trade zone has existed for more than 15 years, but this is the first industry in the county to use and activate it.

"It allows Caterpillar to import foreign-origin goods without paying duty until it's shipped outside the foreign-trade zone," Fowler said.

Goods are not technically in the country until they are shipped out, Fowler said.

This trade zone is similar to the freeport tax exemption the county established last year, he said.

Fowler said there are no initial consequences to the taxing agencies. Some of Caterpillar's inventory that does not qualify for the freeport tax exemption or the foreign trade zone agreement will be charged ad valorem tax, Fowler said.

Pozzi said the trade zone is an added incentive to attract more industries.

Fowler agreed.

"It's an example of how a company has used some of the incentives available and hopefully that will attract more incentives," Fowler said.

The U.S. has 250 foreign-trade zones that export about $34.8 billion annually, according to the state report.



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