February 5, 1998
BILL ANALYSIS
TO: Members, Committee on Trade and Economic Development
FROM: Kenny Pittman, Research Analyst (786-7392)
RE: HB 2798 - Creating business and occupation tax credits to provide housing for low-income and disabled persons.
BACKGROUND:
In 1997, the Legislature created a task force on financing housing for low-income seniors and persons with disabilities. The purpose of the task force was to develop recommendations on techniques to finance the construction, rehabilitation and repair, or preservation of housing for low-income seniors and persons with disabilities. One of the task force recommendations was to create a pool of flexible funds that could be used to finance housing for low-income seniors and persons with disabilities.
Washington=s major business tax is the business and occupation (B&O) tax. The tax is imposed on the gross receipts of business activities conducted within the state, without any deductions for the cost of doing business. Businesses are taxable according to the activities they engage in and therefor may be subject to more than one tax rate. After July 1, 1998, the business and occupation tax will have 10 different rates.
SUMMARY:
A one-time auction of $75 million in business and occupation (B&O) tax credits is authorized. Any person with a B&O tax liability may purchase tax credits. The tax credit must be used within two years of the date of purchase. The tax credits may be transferred to a successor if the business or firm is sold, assigned, conveyed, or otherwise transferred.
Proceeds from the sale of B&O tax credits are placed in a trust account with the Washington State Housing Finance Commission (WSHFC). The WSHFC may only disburse funds to finance housing for low-income seniors and persons with disabilities. The housing programs must be approved by the WSHFC, the director of the Department of Community, Trade, and Economic Development, and the task force on housing for seniors and persons with disabilities that was created by the Legislature in 1997.