ANALYSIS OF HB 1791

House Agriculture & Ecology Committee                                        February 17, 1997

BACKGROUND:

Four of the types of activities upon which a business and occupation (B&O) tax is levied are manufacturing, selling at wholesale, selling at retail, and providing services.  The base B&O tax rate on manufacturing and selling at wholesale is 0.484%.  (RCW 82.04.240 and 82.04.270.)  The base B&O tax rate retailers is 0.471%.  (RCW 82.04.250.)  The B&O tax on business service activities varies from a rate of 0.275% for international investment management services to 2.0% for general business services.  The tax is on the gross income or gross proceeds of sales of the service.  (RCW 82.04.290.)  A surcharge of 4.5% times the base B&O tax rate for a number of activities is imposed until June 30, 1997.  (RCW 82.04.2201.)

SUMMARY:

The B&O tax laws do not apply to a person=s business activity conducted for an agricultural commodity board or commission created under the Agricultural Enabling Act of 1955 or 1961 or directly by statute, under certain circumstances.  B&O taxes do not apply if:

Cthe activity is approved by a referendum conducted by the commission;

Cthe person is specified in referendum information distributed by the commission as a person who is to conduct the activity; and

Cthe referendum is conducted in the manner prescribed by the statutes governing the commission for approving assessments or expenditures, or activities of the commission.