AN ACT Relating to increases in revenue; amending RCW 82.24.020, 82.24.070, 82.02.030, 82.26.020, and 48.14.020; reenacting and amending RCW 82.24.260; repealing RCW 28A.47.440 and 82.24.025; providing effective dates; and declaring an emergency.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

Sec. 1. Section 82.24.020, chapter 15, Laws of 1961 as last amended by section 15, chapter 3, Laws of 1983 2nd ex. sess. and RCW 82.24.020 are each amended to read as follows:

(1) There is levied and there shall be collected as hereinafter provided, a tax upon the sale, use, consumption, handling, possession or distribution of all cigarettes, in an amount equal to the rate of ((~~eight~~)) fifteen and one-half mills per cigarette.

(2) Wholesalers and retailers subject to the payment of this tax may, if they wish, absorb one-half mill per cigarette of the tax and not pass it on to purchasers without being in violation of this section or any other act relating to the sale or taxation of cigarettes.

(3) For purposes of this chapter ((~~and RCW 28A.47.440~~)), "possession" shall mean both (a) physical possession by the purchaser and, (b) when cigarettes are being transported to or held for the purchaser or his designee by a person other than the purchaser, constructive possession by the purchaser or his designee, which constructive possession shall be deemed to occur at the location of the cigarettes being so transported or held.

((~~(2) An additional tax is imposed equal to the rate specified in RCW 82.02.030 multiplied by the tax payable under subsection (1) of this section, RCW 82.24.025, and 28A.47.440.~~))

Sec. 2. Section 82.24.070, chapter 15, Laws of 1961 as last amended by section 14, chapter 299, Laws of 1971 ex. sess. and RCW 82.24.070 are each amended to read as follows:

Wholesalers and retailers subject to the provisions of this chapter shall be allowed compensation for their services in affixing the stamps herein required a sum equal to two percent of the first four mills of the value of the stamps purchased or affixed by them, one percent of the next one mill of the value of the stamps purchased or affixed by them, and one-half of one percent of the next one-half mill of the value of the stamps purchased or affixed by them.@p0

Sec. 3. Section 7, chapter 157, Laws of 1972 ex. sess. as last amended by section 217, chapter 3, Laws of 1983 and by section 3, chapter 189, Laws of 1983 and RCW 82.24.260 are each reenacted and amended to read as follows:

Any retailer who sells or otherwise disposes of any unstamped cigarettes other than (1) a federal instrumentality with respect to sales to authorized military personnel and (2) a federally recognized Indian tribal organization with respect to sales to enrolled members of the tribe shall collect from the buyer or transferee thereof the tax imposed on such buyer or transferee by ((~~RCW 82.24.020, 82.24.025, and 28A.47.440~~)) this chapter and remit the same to the department after deducting from the tax collected the compensation he would have been entitled to under the provisions of this chapter ((~~and RCW 28A.47.440~~)) if he had affixed stamps to the unstamped cigarettes. Such remittance shall be made at the same time and manner as remittances of the retail sales tax as required under chapters 82.08 and 82.32 RCW. In the event the retailer fails to collect the tax from the buyer or transferee, or fails to remit the same, the retailer shall be personally liable therefor, and shall be subject to the administrative provisions of RCW 82.24.230 with respect to the collection thereof by the department. The provisions of this section shall not relieve the buyer or possessor of unstamped cigarettes from personal liability for the tax imposed by ((~~RCW 82.24.020, 82.24.025, and 28A.47.440~~)) this chapter.

Nothing in this section shall relieve a wholesaler or a retailer from the requirements of affixing stamps pursuant to RCW 82.24.040 and 82.24.050.

Sec. 4. Section 31, chapter 35, Laws of 1982 1st ex. sess. as last amended by section 9, chapter 471, Laws of 1985 and RCW 82.02.030 are each amended to read as follows:

(1) The rate of the additional taxes under RCW 54.28.020(2), 54.28.025(2), 66.24.210(2), 66.24.290(2), 82.04.2901, 82.16.020(2), 82.26.020(2), 82.27.020(5), 82.29A.030(2), 82.44.020(5), and 82.45.060(2) shall be seven percent;

(2) The rate of the additional taxes under RCW 82.08.150(4) shall be fourteen percent; and

(3) ((~~The rate of the additional taxes under RCW 82.24.020(2) shall be fifteen percent; and~~

~~(4)~~)) The rate of the additional taxes under RCW 48.14.020(3) shall be four percent.

NEW SECTION. Sec. 5. The following acts or parts of acts are each repealed:

(1) Section 28A.47.440, chapter 223, Laws of 1969 ex. sess., section 1, chapter 70, Laws of 1971 ex. sess., section 1, chapter 157, Laws of 1972 ex. sess., section 2, chapter 189, Laws of 1983 and RCW 28A.47.440; and

(2) Section 2, chapter 59, Laws of 1979 ex. sess. and RCW 82.24.025.

Sec. 6. Section .14.02, chapter 79, Laws of 1947 as last amended by section 7, chapter 3, Laws of 1983 2nd ex. sess. and RCW 48.14.020 are each amended to read as follows:

(1) Subject to other provisions of this chapter, each authorized insurer except title insurers shall on or before the first day of March of each year pay to the state treasurer through the commissioner's office a tax on premiums. Except as provided in subsection (2) of this section, such tax shall be in the amount of two and sixteen one-hundredths percent of all premiums, excluding amounts returned to or the amount of reductions in premiums allowed to holders of industrial life policies for payment of premiums directly to an office of the insurer, collected or received by the insurer during the preceding calendar year in the case of foreign and alien insurers, and in the amount of one and sixteen one-hundredths percent of all such premiums in the case of domestic insurers, for direct insurances, other than ocean marine and foreign trade insurances, after deducting premiums paid to policyholders as returned premiums, upon risks or property resident, situated, or to be performed in this state. For the purposes of this section the consideration received by an insurer for the granting of an annuity shall not be deemed to be a premium.

(2) In the case of insurers which require the payment by their policyholders at the inception of their policies of the entire premium thereon in the form of premiums or premium deposits which are the same in amount, based on the character of the risks, regardless of the length of term for which such policies are written, such tax shall be in the amount of two and sixteen one-hundredths percent of the gross amount of such premiums and premium deposits upon policies on risks resident, located, or to be performed in this state, in force as of the thirty-first day of December next preceding, less the unused or unabsorbed portion of such premiums and premium deposits computed at the average rate thereof actually paid or credited to policyholders or applied in part payment of any renewal premiums or premium deposits on one-year policies expiring during such year.

(3) An additional tax is imposed equal to the rate specified in RCW 82.02.030 multiplied by the taxes payable under subsections (1), (2), and ((~~(4)~~)) (5) of this section. All revenues from this additional tax shall be deposited in the state general fund.

(4) An additional tax is imposed for calendar year 1985 and thereafter upon each authorized insurer which has at any time during 1985 offered homeowners' insurance covering nonbusiness liability risks within the state of Washington to persons operating at the insured premises a family day care center as defined by RCW 74.15.020 and licensed by the department of social and health services, and which insurer does not offer such coverage to such persons after July 1, 1985. The amount of such tax shall be equal to the premiums derived from the sale of all homeowners' insurance policies within the state of Washington by such insurer multiplied by one-half of one percent.

The legislature finds that the state of Washington faces a crisis in home day care and that legislation is needed to correct the problems of insurance for day care providers. It is the policy of the state of Washington that the providers of day care services must pay the full premium costs of insuring for liability but that such insurance must be available. The financial institutions and insurance committees of the house and senate shall report proposed legislation by December 30, 1985, to their respective houses.

(5) Each authorized insurer shall with respect to all ocean marine and foreign trade insurance contracts written within this state during the preceding calendar year, on or before the first day of March of each year pay to the state treasurer through the commissioner's office a tax of ninety-one one-hundredths of one percent on its gross underwriting profit. Such gross underwriting profit shall be ascertained by deducting from the net premiums (i.e., gross premiums less all return premiums and premiums for reinsurance) on such ocean marine and foreign trade insurance contracts the net losses paid (i.e., gross losses paid less salvage and recoveries on reinsurance ceded) during such calendar year under such contracts. In the case of insurers issuing participating contracts, such gross underwriting profit shall not include, for computation of the tax prescribed by this subsection, the amounts refunded, or paid as participation dividends, by such insurers to the holders of such contracts.

((~~(5)~~)) (6) The state does hereby preempt the field of imposing excise or privilege taxes upon insurers or their agents, other than title insurers, and no county, city, town or other municipal subdivision shall have the right to impose any such taxes upon such insurers or their agents.

((~~(6)~~)) (7) If an authorized insurer collects or receives any such premiums on account of policies in force in this state which were originally issued by another insurer and which other insurer is not authorized to transact insurance in this state on its own account, such collecting insurer shall be liable for and shall pay the tax on such premiums.

((~~(7)~~)) (8) This section shall be effective as to and shall govern the payment of all taxes due for calendar year ((~~1982~~)) 1985 and thereafter.

Sec. 7. Section 82.26.020, chapter 15, Laws of 1961 as last amended by section 16, chapter 3, Laws of 1983 2nd ex. sess. and RCW 82.26.020 are each amended to read as follows:

((~~(1) From and after June 1, 1971,~~)) There is levied and there shall be collected a tax upon the sale, use, consumption, handling, or distribution of all tobacco products in this state at the rate of ((~~forty-five~~)) fifty-five percent of the wholesale sales price of such tobacco products. Such tax shall be imposed at the time the distributor ((~~(a)~~)) (1) brings, or causes to be brought, into this state from without the state tobacco products for sale, ((~~(b)~~)) (2) makes, manufactures, or fabricates tobacco products in this state for sale in this state, or ((~~(c)~~)) (3) ships or transports tobacco products to retailers in this state, to be sold by those retailers.

((~~(2) An additional tax is imposed equal to the rate specified in RCW 82.02.030 multiplied by the tax payable under subsection (1) of this section.~~))

NEW SECTION. Sec. 8. This act is necessary for the immediate preservation of the public peace, health, and safety, the support of the state government and its existing public institutions, and shall take effect July 1, 1985, except sections 1 through 5 of this act shall take effect October 1, 1985, if the federal tax on cigarettes under 26 U.S.C. Sec. 5701(b)(1) on this date has reverted from eight dollars per thousand cigarettes to four dollars per thousand cigarettes; otherwise sections 1 through 5 of this act shall be null and void in their entirety.