Washington State House of Representatives Office of Program Research | BILL ANALYSIS |
Finance Committee |
HB 1751
This analysis was prepared by non-partisan legislative staff for the use of legislative members in their deliberations. This analysis is not a part of the legislation nor does it constitute a statement of legislative intent. |
Brief Description: Concerning the time period during which sales and use tax for public facilities in rural counties may be collected.
Sponsors: Representatives Kessler, Van De Wege, Takko, Kenney, Finn, Haigh and Blake.
Brief Summary of Bill |
|
Hearing Date: 2/17/09
Staff: Jeff Mitchell (786-7139)
Background:
Retail sales and use taxes are imposed by the state, most cities, and all counties. Retail sales taxes are imposed on retail sales of most articles of tangible personal property and some services. If retail sales taxes were not collected when the property or services were acquired by the user, then use taxes are applied to the value of most tangible personal property and some services when used in this state. Use tax rates are the same as retail sales tax rates. The state tax rate is 6.5 percent. Local tax rates vary from 0.5 percent to 2.5 percent, depending on the location. The average local tax rate is 2 percent, for an average combined state and local tax rate of 8.5 percent.
Rural counties may impose a local options sales and use tax of up to 0.09 percent. The tax is credited against the state's 6.5 percent sales tax and, thus, the consumer does not see an increase in the amount of the tax paid. Revenues from this local option tax may only be used to finance public facilities serving economic development purposes and pay for personnel in economic development offices. Public facilities are those listed as an item in county's officially adopted, overall economic development plan, the economic development section of the comprehensive plan, or listed in the capital facilities plan.
For purposes of the tax, "rural counties" are defined as a county with a population density of less than 100 persons per square mile, or smaller than 225 square miles.
This sales and use tax for rural counties was first enacted in 1997. The maximum tax rate at that time was 0.04 percent, which could commence no sooner than July 1, 1998 and last for a period of 25 years after the date the tax was first imposed. In 1999, the rate was increased to 0.08 percent.
Effective August 1, 2007, the maximum tax rate was increased from 0.08 percent to 0.09 percent. Of the 32 counties that are eligible, 30 counties have increased the tax rate to 0.09 percent since August 1, 2007, with only Columbia and Garfield Counties not increasing their tax rates.
Summary of Bill:
Rural counties that collect the tax at the rate of 0.09 percent may continue to do so for 25 years after the date the county first imposed the tax at the 0.09 percent tax rate.
The act applies both prospectively and retroactively to August 1, 2007.
Appropriation: None.
Fiscal Note: Available.
Effective Date: The bill takes effect 90 days after adjournment of the session in which the bill is passed.