FINAL BILL REPORT

                  HB 2278

                         C 309 L 98

                     Synopsis as Enacted

Brief Description:  Exempting electric generating facilities powered by landfill gas from sales and use taxes.

Sponsors:  Representatives Honeyford and Lisk.

House Committee on Finance

Senate Committee on Ways & Means

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 article or service.  In addition, local sales taxes apply.  The total tax rate is between 7 percent and 8.6 percent, depending on location.  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.

Machinery and equipment used directly in generating electricity using wind or sun energy are exempt from sales and use tax.  Installation costs are also exempt.  Only facilities capable of generating 200 kilowatts of electricity are eligible for the exemption.   The exemption ends June 30, 2005. 

Summary:  The machinery and equipment sales and use tax exemption for wind and sun energy facilities is extended to facilities using landfill gas.

Votes on Final Passage:

House970

Senate441

Effective:  April 3, 1998