CORRECTED-Boeing's S. Carolina city tax to fall as production rises
(Corrects to show Boeing is largest private employer in city, not state, paragraph 2)
By Harriet McLeod
NORTH CHARLESTON, S.C., July 12 (Reuters) - Boeing Co.'s South Carolina 787 Dreamliner manufacturing plant got a large tax break when the North Charleston City Council voted to slash in half the current top rate used to calculate annual fees for businesses earning $250 million or more.
The City Council approved a measure on Thursday that cuts the annual business licensing fee Boeing, the city's largest private employer, pays to the city to 0.1 percent on gross revenue from Boeing's local plant. The new rate applies to revenue that exceeds $7.5 billion a year.
For revenue between $250 million and $7.5 billion, the rate was cut to 5 percent from 10 percent.
The South Carolina plant, Boeing's second assembly facility after its main factory in Everett, Washington, currently builds 1.5 Dreamliners a month and wants to increase that to three a month by mid-2014, spokeswoman Candy Eslinger said. Boeing says the annual production rate target remains 10 a month for the combined output of both facilities. So far, the company is producing an average of 7 planes a month.
At a list price of $207 million, 36 Dreamliners a year would yield about $7.45 billion in annual revenue, but airlines typically get discounts on planes.
The tax measure "was not introduced to benefit a particular business or industry," North Charleston finance director Warren Newton said, but rather "to promote future business growth."
In April, Boeing announced plans to invest at least $1 billion to expand production in its South Carolina factory over the next eight years, creating at least 2,000 additional jobs. Boeing has more than 6,000 workers in the state.
The company has received tax breaks and incentives from the city, Charleston County and the state totaling more than $1 billion.
Boeing shares were down about 5 percent in early afternoon trade on Friday after a Dreamliner, operated by Ethiopian Airlines, caught fire and closed London's Heathrow Airport. (Reporting by Harriet McLeod; Editing by Alwyn Scott and Leslie Gevirtz)