WILMINGTON, Del. -- Gov. Pierre S. du Pont Wednesday signed a bill lifting interest ceilings and giving tax breaks to banking operations, a move he said could make Delaware a new national banking center.
The bill was signed with a flourish at ceremonies in the governor's office with representatives from state and local government and the banking industry.
The new regulations also allow membership fees for credit cards.
Two major banking companies, Chase Manhattan Corp. and J.P. Morgan Co., have said they will move their credit card operations to the state because of the new regulations.
Du Pont said he was 'delighted with the new legislation. This gives us a modern, progressive banking code that lays the foundation for a new industry in the state.'
He said the Financial Center Development Act will result in 600 new jobs for the state in the immediate future, but gave no dates when the New York companies would open credit card operations in Delaware.
First National Bank of Maryland and bankers from New Jersey and Pennsylvania have also expressed interest in moving part of their operations to Delaware.
'Delaware now steps forward as the nation's newest center of business and finance. The new legislation will enhance the state economy, secure more and better jobs, and bring about major changes in financing and banking,' he said.
The bill was not without opposition, however.
Ted Keller of the Citizens Coalition for Tax Reform said his group will continue to fight the new law, but wasn't specific about how that would be done. And consumer advocate Ralph Nader said other consumer groups oppose the bill because it may undermine the tax base of the state.
The bill calls for major tax incentives for companies earning more than $20 million a year in the state. Banks earning less than $20 million will pay an 8.7 percent tax, while banks making more than $30 million will pay only 2.7 percent. Those in between will pay on a sliding scale based on earnings.
New York City banks now pay a 13.8 percent local tax and a 12 percent state tax.
The Delaware bill is similar to one already in effect in South Dakota, a state that will soon become headquarters for Citicorp's credit card operations.
