SENATE BILL REPORT

                   SB 5424

              As Reported By Senate Committee On:

                  Ways & Means, April 7, 1997

Title:  An act relating to international services.

Brief Description:  Providing tax exemptions for businesses in community empowerment zones that provide international services.

Sponsors:  Senators West, Wojahn, Winsley, Hale, Franklin, Jacobsen and Rasmussen.

Brief History:

Committee Activity:  Ways & Means:  3/6/97, 4/7/97 [DPS].

SENATE COMMITTEE ON WAYS & MEANS

Majority Report:  That Substitute Senate Bill No. 5424 be substituted therefor, and the substitute bill do pass.

  Signed by Senators West, Chair; Strannigan, Vice Chair; Bauer, Hochstatter, Kohl, Roach, Rossi, Schow, Sheldon, Snyder, Swecker and Winsley.

Staff:  David Schumacher (786-7474)

Background:  Community Empowerment Zones (CEZ) are defined as areas that are designated to receive federal, state, or local assistance to increase economic activity, have high unemployment rates, and have a preponderance of low-income households.  The existing CEZs are Yakima, Seattle, Tacoma, Bremerton, and White Center in King County.

The business and occupation tax (B&O) is levied for the privilege of doing business in Washington.  The tax is levied on the gross receipts of all business activities (except utility activities) conducted within the state.

The 2 percent insurance premiums tax is paid in lieu of the business and occupation tax on the net premiums received by authorized insurers.

Summary of Substitute Bill:  A credit is provided against either the B&O tax or the insurance premiums tax equal to 5 percent of the qualified payroll for businesses that meet the following criteria:

     1) Located in a designated community empowerment zone.

     2) Engaged in providing selected international services.

     3) Expend 20 percent of the value of the credit on training.

     4) Provide internship positions.

     5) Hire 20 percent of employees from within the CEZ.

Substitute Bill Compared to Original Bill:  The substitute narrows the definition of eligible businesses.

Appropriation:  None.

Fiscal Note:  Available

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

Testimony For:  The city of Tacoma is trying to attract international service sector jobs.  Their plan is based on the success of the city of Dublin which has already implemented a similar plan.

Testimony Against:  None.

Testified:  Randy Lewis, City of Tacoma (pro).