WASHINGTON — The Senate passed a $130 billion bill Wednesday by a vote of 62 to 36 that shortens depreciation rules for remodeling stores and provides more capital to expand businesses through the Small Business Administration.
To help pay for the bill, which also includes unemployment insurance extensions, the measure prevents paper companies from claiming $29 billion in tax credits for burning “black liquor,” a pulp by-product used as an alternative fuel.
Apparel and retail groups said the bill will provide some relief to segments of the industry. It extends through this year a 15-year depreciation period for retail improvements that expired at the end of last year and in January reverted back to a 39-year depreciation period. The reinstatement of the shorter depreciation period would give retailers a boost in writing off expenses of remodeling stores, which they typically do every five to seven years. The proposal is estimated to cost $4.8 billion over 10 years, according to the office of Senate Majority Leader Harry Reid.
“Retailers must keep remodeling their stores every five to seven years to keep them fresh and keep customers coming in. It’s a competitive issue,” said Rachelle Bernstein, vice president and tax counsel for the National Retail Federation. “If the cost of making repairs is much higher because of a 39-year [write-off] period and not a 15-year period, it is harder to show profitability and it is more likely stores will be closed and people will be laid off.”
Apparel and textile companies would get a portion of the help they were seeking in access to more credit with a provision in the bill that provides $354 million in funding through the end of the fiscal year to increase loan guarantees to 90 percent from 75 percent and eliminate fees charged to borrowers under SBA loan programs. The provision essentially extends funding that expired in the stimulus bill that was enacted last year. It is expected to support $18.5 billion in loans to small businesses this year.
“Unlike the last jobs bill [which is still pending in the Senate], this bill has provisions that can make a difference for small businesses and apparel and footwear companies,” said Nate Herman, senior director of international trade for the American Apparel & Footwear Association.
The House passed a $154 billion jobs bill in December that included many of the same tax breaks, and the two bills will have to be reconciled before the final version is sent to the President for signing into law.