SENATE BILL REPORT

                   SB 6333

              As Reported By Senate Committee On:

                Ways & Means, February 8, 2000

Title:  An act relating to sales and use tax exemptions for manufacturing machinery and equipment.

Brief Description:  Modifying the sales and use tax exemption for manufacturing machinery and equipment.

Sponsors:  Senators Haugen, Spanel, Rossi, Costa, Shin, Long, McDonald, Kohl‑Welles, Horn, Fairley, Jacobsen, Gardner, Stevens, Hale, Winsley and Rasmussen.

Brief History:

Committee Activity:  Ways & Means:  1/26/2000, 2/8/2000 [DPS].

SENATE COMMITTEE ON WAYS & MEANS

Majority Report:  That Substitute Senate Bill No. 6333 be substituted therefor, and the substitute bill do pass.

  Signed by Senators Loveland, Chair; Bauer, Vice Chair; Brown, Vice Chair; Fairley, Fraser, Honeyford, Kline, Kohl-Welles, Long, McDonald, Rasmussen, Rossi, B. Sheldon, Snyder, Spanel, Winsley, Wojahn and Zarelli.

Staff:  David Schumacher (786-7474)

Background:  The retail sales tax is imposed on the sale of most items of tangible personal property and some services purchased at retail.  The state=s retail sales and use tax is based on 6.5 percent of the selling price.  Local governments may also impose additional taxes; therefore, the combined state and local retail sales and use tax rate currently ranges from 7.0 percent to 8.6 percent.

In 1995, the Legislature passed 2ESSB 5201 which included a sales tax exemption for new machinery and equipment (M&E) used directly in the manufacturing process.

Hand powered tools, property with a useful life of less than a year and buildings are not exempt.

Summary of Substitute Bill:  The sales tax exemption for manufacturing machinery and equipment is broadened to include manufacturing property that is used to create molds even if that property has a useful life of less than a year.

Substitute Bill Compared to Original Bill:  The original bill was drafted more broadly than intended.

Appropriation:  None.

Fiscal Note:  Available.

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

Testimony For:  This bill supports the original intentions of the M&E exemption, to stimulate economic investment and job creation.

Testimony Against:  None.

Testified:  Steve Dean, Bayliner Marine Corporation/US Marine (pro).