SAN BENITO — An old barrier no longer stands in the way of drawing warehousing and manufacturing to town.
Earlier this week, city commissioners passed an ordinance approving the so-called Freeport Exemption — lifting a tax applied to warehoused inventory.
“It will put us on a competitive edge with our neighboring county,” City Manager Manuel De La Rosa told city commissioners Tuesday, referring to Hidalgo County, which has already lifted the tax.
The Freeport Exemption lifts the tax on inventory and materials-in-process manufactured locally and shipped out of Texas within 175 days.
Lifting the tax will help the city draw distribution companies, Rebeca Castillo, executive director of the San Benito Economic Development Corporation, said yesterday.
“It could be automotive, manufacturing — for the most part companies transferring goods from this area out of state,” she said.
In the San Benito area, warehousing and manufacturing companies could save a total of as much as $500,000 based on 2016 figures, according to the city’s Economic Development Corporation.
Wednesday, city officials did not respond to messages requesting the amount of money generated through the Freeport tax.
After Hidalgo County adopted the Freeport Exemption, Cameron County scrapped the tax before Harlingen officials also stamped it out.
In 2016, Cameron County officials estimated the tax generated about $1.6 million a year.
But county commissioners lifted the tax to better compete with Hidalgo County, which had already adopted the Freeport Exemption.
In Harlingen, about $100 million in warehoused inventory was eligible for exemption in 2016.
The Freeport Exemption was expected to help Harlingen-based warehousing companies save $300,000 to $400,000 a year, Raudel Garza, executive director of the Harlingen Economic Development Corporation, said at the time.