Delaware has become the third state to exempt from use tax all reusable pallets and containers used in food processing. It follows Florida and California, which have similar legislation.

Use tax of 1.92% is levied in Delaware on leases of personal tangible property, which up until passage of the legislation also included leased pallets and containers, such as those provided by pooling services.

The legislation defines reusable pallets and containers as "any pallet or crate which is under an arrangement for the repeated return of such property to its initial purchaser for long-term use." The product applies only to transactions that take place within Delaware. Prior to the new law, only those pallets and containers purchased for business use and those used in one-way shipments had been exempt from use tax.

"This now levels the playing field so that users of reusable pallets and containers can be competitive with one-way shippers," says Ken Smith, president of The Reusable Pallet & Container Coalition (www.rpccreuseable.org). The RPCC is a non-profit organization of poolers and container and pallet manufacturers that advocate the use of reusables.

"The tax relief is a recognition by the state of the value of reusables," adds Smith.

He says that the RPCC is working to extend the exemption in many other states, but faces difficulty. With so many states currently facing budget deficits, legislators are not anxious to provide tax breaks.

Similar to Delaware, the exemptions in California cover agricultural uses, while the Florida law provides exemptions for all reusable pallets and containers, regardless of industry.