SENATE BILL REPORT

                  EHB 1132

                     As of March 31, 1995

Title:  An act relating to use tax on aircraft training equipment transferred to Washington state as a result of base closure.

Brief Description:  Exempting from use tax naval equipment transferred due to base closure.

Sponsors:  Representatives Beeksma, Sehlin, B. Thomas, Sheldon, Foreman, L. Thomas, Costa, Huff and Mason; by request of Governor Lowry.

Brief History:

Committee Activity:  Ways & Means:  4/3/95.

SENATE COMMITTEE ON WAYS & MEANS

Staff:  Terry Wilson  (786-7715)

Background:  The state sales tax is paid on each retail sale of most articles of tangible personal property and certain services.  Taxable services include construction, repair, telephone, lodging of less than 30 days, physical fitness, and some recreation and amusement services.  The use tax is imposed on the use of articles of tangible personal property when the sale or acquisition has not been subject to the sales tax.  The use tax commonly applies to purchases made from out-of-state firms, including purchases by mail order.

The federal supremacy clause and the doctrine of intergovernmental immunity prevent the state from taxing the federal government directly.  However, a contractor who installs property for the federal government is liable for use tax on the value of the materials used in the installation, including materials supplied to the contractor by the government.

Summary of Bill:  The use of military aircraft training equipment transferred to Washington State from a naval installation in another state as a result of the federal base closure act is exempt from use tax.

Appropriation:  None.

Fiscal Note:  Available.

Effective Date:  The bill contains an emergency clause and takes effect immediately.