HOUSE BILL REPORT
SSB 5009
This analysis was prepared by non-partisan legislative staff for the use of legislative members in
their deliberations. This analysis is not a part of the legislation nor does it constitute a
statement of legislative intent.
As Passed House:
April 18, 2007
Title: An act relating to exempting biodiesel fuel used for farm use from sales and use taxation.
Brief Description: Exempting biodiesel fuel used for nonhighway farm use from sales and use tax.
Sponsors: By Senate Committee on Agriculture & Rural Economic Development (originally sponsored by Senators Haugen, Hatfield, Poulsen, Sheldon, Holmquist, Rasmussen, Schoesler, Kline and Shin).
Brief History:
Finance: 4/6/07 [DP].
Floor Activity:
Passed House: 4/18/07, 97-0.
Brief Summary of Substitute Bill |
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HOUSE COMMITTEE ON FINANCE
Majority Report: Do pass. Signed by 9 members: Representatives Hunter, Chair; Hasegawa, Vice Chair; Orcutt, Ranking Minority Member; Condotta, Assistant Ranking Minority Member; Conway, Ericks, McIntire, Roach and Santos.
Staff: Jeff Mitchell (786-7139).
Background:
Retail sales and use taxes are imposed by the state, most cities, and all counties. Retail sales
taxes are imposed on retail sales of most articles of tangible personal property and some
services. Use taxes apply to the value of most tangible personal property and some services
when used in this state, if retail sales taxes were not collected when the property or services
were acquired by the user. Use tax rates are the same as retail sales tax rates. The state tax
rate is 6.5 percent. The state tax is deposited in the State General Fund. Local tax rates vary
from 0.5 percent to 2.4 percent, depending on the location. The average local tax rate is 2.0,
for an average combined state and local tax rate of 8.5 percent.
Fuel is exempt from sales and use tax when the motor vehicle or special fuel tax applies.
Fuel used for nonhighway purposes is exempt from fuel tax, but is generally subject to the
retail sales and use tax. Motor vehicle fuel is gasoline. Special fuel is any fuel other than
gasoline and includes diesel and propane fuel.
The current fuel tax rate is 34 cents per unit volume.
Legislation passed during the 2006 session exempts diesel fuel and aircraft fuel from sales
and use tax if the fuel is used by a farm fuel user (FFU) for nonhighway farm activities. A
FFU is a farmer or a person who provides horticultural services for a farmer. Horticultural
services include soil preparation, crop cultivation, and crop harvesting services. The sales
and use tax exemption does not apply to fuel used for home heating. The exemption does not
apply to biodiesel fuel.
Summary of Bill:
Biodiesel fuel, including blended biodiesel fuel, for a FFU for nonhighway use is exempted
from sales and use tax. The exemption does not cover fuel used for home heating.
"Biodiesel fuel" is defined as fuel composed of mono-alkyl esters of long fatty acids derived
from vegetable oils or animal fats that is registered with the federal Environmental Protection
Agency and meets standards established by the American Society for Testing and Materials.
Appropriation: None.
Fiscal Note: Preliminary fiscal note available.
Effective Date: The bill contains an emergency clause and takes effect immediately.
Staff Summary of Public Testimony:
None.
Persons Testifying: None.