HOUSE BILL REPORT

                  SB 6588

                 As Passed House - Amended:

                       March 10, 1998

Title:  An act relating to exempting movie theater snack counters from the special stadium sales and use tax imposed on restaurants.

Brief Description:  Exempting movie theater snack counters from the stadium tax imposed on restaurants.

Sponsors:  Senators Winsley, Snyder, Kohl, B. Sheldon and Oke.

Brief History:

  Committee Activity:

Finance:  3/4/98 [DP].

Floor Activity:

Passed House - Amended:  3/10/98, 85-9.

HOUSE COMMITTEE ON FINANCE

Majority Report:  Do pass.  Signed by 11 members:  Representatives B. Thomas, Chairman; Carrell, Vice Chairman; Mulliken, Vice Chairman; Dunshee, Ranking Minority Member; Dickerson, Assistant Ranking Minority Member; Boldt; Mason; Morris; Pennington; Thompson and Van Luven.

Staff:  Linda Brooks (786-7153).

Background:  The sales tax is imposed on retail sales of most items of tangible personal property and some services.  The state tax rate is 6.5 percent and is applied to the selling price of the item or service.  In addition, local sales taxes apply.  The total tax rate is between 7 percent and 8.6 percent, depending on location.  In most areas of King County the total tax rate is 8.6 percent. Sales tax applies when items are purchased at retail in state.  Sales tax is paid by the purchaser and collected by the seller.

Use tax is imposed on the use of an item in this state, when the acquisition of the item has not been subject to sales tax.  Use tax applies to items purchased from sellers who do not collect sales tax, items acquired from out-of-state, and items produced by the person using the item.  Use tax is equal to the sales tax rate multiplied by the value of the property used.  Use tax is paid directly to the Department of Revenue.

In 1995, the Legislature authorized counties with a population greater than one million to impose certain taxes for the purpose of financing a professional baseball stadium.  Among the taxes authorized was a special sales and use tax on food and beverages sold in restaurants, taverns, and bars, at a rate not exceeding 0.5 percent. 

King County used this taxing authority to impose a 0.5 percent sales and use tax on food and beverages sold in restaurants, bars, and taverns which took effect on January 1, 1996.  This 0.5 percent sales and use tax is in addition to the regular retail sales and use tax, so a total sales and use tax of 9.1 percent applies to food and beverages sold in restaurants, bars, and taverns in most areas of King County.  King County must use revenues from this 0.5 percent food and beverage sales and use tax to repay baseball stadium bonds.  This food and beverage tax expires when the baseball stadium bonds are retired or 20 years after the tax was first imposed, whichever comes first.

For purposes of the stadium food and beverage sales and use tax, the Department of Revenue has defined a restaurant as meaning any establishment having special space and accommodation where food and beverages are regularly sold to the public for immediate, but not necessarily on-site, consumption.  The term restaurant includes  lunch counters, diners, coffee shops, espresso shops or bars, concession stands or counters, delicatessens, and cafeterias, but, by statute, excludes grocery stores, mini-markets, and convenience stores.   Concession stands located in theaters are classified as restaurants, so drinks and snacks sold in theaters located in King County are subject to the 0.5 percent food and beverage sales and use tax.

Summary of Bill:  The term, "restaurant," does not include snack counters located in movie theaters or in centers or theaters for the performing arts.  As a result, a special sales and use tax up to 0.5 percent imposed by a county with a population over one million on food and beverages sold in restaurants, taverns, and bars for the purpose of financing a professional baseball stadium does not apply to snacks and drinks sold at theater snack counters in movie theaters or in centers or theaters for the performing arts.

Appropriation:  None.

Fiscal Note:  Available.

Effective Date:  Ninety days after adjournment of session in which bill is passed.

Testimony For:  None.

Testimony Against:  None.

Testified:  None.