Washington State House of Representatives Office of Program Research	BILL ANALYSIS
Finance

HB 1018

Brief Description:  Providing tax relief for disasters.

Sponsors:  Representatives Pennington, Mielke, Pearson and Alexander.

Brief Summary of Bill

$Sales tax exemptions are created for labor and service charges associated with moving houses, demolishing houses, or cleaning up debris in an area that has been declared as a federal landslide disaster area.

Hearing Date:  1/18/01

Staff:  Mark Matteson (786‑7145).

Background: 

The sales tax is imposed on retail sales of most items of tangible personal property and some services.  Charges for labor and services rendered to construct, repair, raze, or move buildings or structures are subject to sales tax.   The combined state and local sales tax rate is between 7 and 8.6 percent, depending on location.

On October 16, 1998 President Clinton declared a federal disaster area in regards to a landslide occurring in the City of Kelso.  According to Federal Emergency Management Office documents, the landslide is expected to ultimately destroy or make unlivable 137 homes.

Chapter 311, Laws of 1999 provided sales tax relief on labor and service charges associated with moving or demolishing houses or removing debris from a federal landslide disaster area; the act expired July 1, 2000.  At the time that the act expired, a vast majority of the houses in the landslide area in Kelso had not yet been moved or demolished.  As of January 16, 2001, the City of Kelso had plans to move or demolish a remaining total of 99 houses, to be completed by the latter part of calendar year 2001.

Summary of Bill: 

Labor and service charges associated with the following activities are exempt from sales tax:

$Moving houses out of a federal landslide disaster area;

$Demolishing houses located in a federal landslide disaster area; and

$Removing debris from a federal landslide disaster area.

These sales tax exemptions expire on July 1, 2003.

Effective Date:  The bill contains an emergency clause and takes effect immediately.

Appropriation:  None.

Fiscal Note:  Requested on January 12, 2001.