Capitol Hill

New hope for depreciation

On April 6, Rep. Mark Foley (R-Fla.) introduced HR 1510, the Realistic Roofing Tax Treatment Act of 2005 (R2T2), in the 109th Congress. Rep. Stephanie Tubbs Jones (Ohio) is the lead Democrat. The legislation would shorten the tax depreciation schedule for nonresidential roof systems from the current 39-year depreciation schedule to a more realistic 20-year schedule. Including Foley and Tubbs Jones, nine of the bill's co-sponsors are on the House Ways and Means Committee, which has jurisdiction over tax legislation.

At press time, the number of co-sponsors of HR 1510 had grown to 15, and all indications suggest it quickly will exceed the number of co-sponsors in the previous Congress.

In the 108th Congress, Foley and Tubbs Jones introduced HR 3310, the Realistic Roofing Tax Treatment Act of 2003. Although introduced at the end of the session with little fanfare, it picked up 22 more bipartisan co-sponsors before Congress adjourned.

Sen. Jim Bunning (R-Ky.) introduced the companion bill, S 1679, and was joined by Sens. Saxby Chambliss (R-Ga.), Jeff Sessions (R-Ala.) and James Talent (R-Mo.) as co-sponsors. Bunning is on the Finance Committee and plans to re-introduce the companion bill to HR 1510 with a Senate Democrat. Chambliss, Sessions and Talent are expected to co-sponsor the bill, as is Sen. Jim DeMint (D-S.C.) and Sen. Johnny Isakson (R-Ga.), who co-sponsored the bill in the House of Representatives. However, the Senate version of R2T2 will be slightly modified to explicitly reference energy efficiency in relation to a shortened depreciation schedule for nonresidential roof systems.

Demand-side energy conservation is an advantage of replacing nonperforming roof systems with new, more energy-efficient systems. An August 2003 study sponsored by The Roofing Industry Alliance for Progress found that 90 percent of building owners upgrade to more energy-efficient roof systems when they replace their roofs. With energy prices soaring, this should be considered as Congress contemplates a national energy policy.

The energy bill

On April 21, the House passed HR 6, the Energy Policy Act of 2006, by a 249-183 vote. It essentially is the same bill the House passed in the previous Congress with the exception that though it continues to encourage domestic energy production, energy-efficiency provisions have been scaled back. Tax breaks that totaled more than $30 billion have been reduced to $8 billion with most targeting production activities.

According to The Washington Post, Foley said he and other members of the Ways and Means Committee "wanted a larger percentage of the tax breaks going for energy efficiency and renewable energy but that Chairman Bill Thomas (R-Calif.) did not want to add those as a way of gaining negotiating power with the Senate."

The Senate, where energy legislation failed in 2003 because of a filibuster, is working on its version of the Energy Policy Act of 2005. The Finance Committee is writing the bill's tax section, where R2T2 would have an opportunity to be placed if it has enough support.

Coalition development

To leverage support, NRCA and the Asphalt Roofing Manufacturers Association hosted a lunch April 21 for corporations and associations with an interest in joining the Coalition for Realistic Roofing Tax Treatment. Those in attendance included representatives from the American Hotel and Lodging Association, Building Owners and Managers Association International, and International Franchise Association.

Foley, his staff and staff from Bunning's office were there to explain the legislation and answer questions. Feedback from participants was extremely positive, and many have added their organizations' names to the coalition.

Looking forward

The Realistic Roofing Tax Treatment Act of 2005 will be introduced no later than this month in the Senate. The Senate energy bill would be an excellent piece of legislation in which to incorporate R2T2. But with thousands of competing interests, it is necessary to generate a broader base of support.

The coalition's goal is to demonstrate broad-based support for R2T2 from a variety of interest groups and help generate as many co-sponsors as possible.

A status report about R2T2 will appear in next month's column with ways Professional Roofing's readers can help in the effort to pass R2T2.

Craig S. Brightup is NRCA's vice president of government relations.


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