Fiat Chrysler shall be spending an added $1 billion on their facilities in Michigan over the coming fifteen years for qualifying for $1.9 billion in business tax credits under agreements approved on Tuesday by the economic development board of the state. This is the second deal with Detroit Three automaker for the year. It has been designed for aiding Michigan to get an improved handle on the billions in taxation incentives given to maintain auto jobs of the state, mainly during the downturn.
The spending cuts of February during mid budget were caused by redemption of higher than expected credits. The agreement amends a deal cut in 2010 between the erstwhile Michigan Economic Growth Authority and the Chrysler Group LLC (known as the US LLC). The car manufacturer was offered a projected tax credit of $1.3 billion till 2031 for a maximum of 20,000 jobs retained in Michigan.
The credits have higher worth at $2 billion almost, because of factors such as higher wages. The new deal fixes Fiat Chrysler’s maximum credits at $1.93 billion till 2029 and slowly increases the retained job numbers that the company can claim to twenty seven thousand. It also puts a yearly limit on tax credit value which might be claimed in a particular year. The FCA has stated that the revised agreement gives improved economic certainly for all sides involved.
The Michigan Strategic Fund Board had approved of a similar deal with Ford Motor Co earlier this year, fixing the total value of the car company’s credit at $2.3 billion.
Steve Arwood, the Board President and Chairman, who is also Michigan Economic Development Corp’s CEO, has stated that he is hopeful of the agreement to be struck with General Motors in the month of December. Speaking in context of the Ford and Fiat Chrysler, he has stated that the deals are excellent for Michigan in terms of knowing transparency, liability and the added capital investment required. The labour agreements are now in place for the coming three to four years.