| Washington State House of Representatives Office of Program Research |
BILL ANALYSIS |
| Finance Committee | |
HB 2678
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.
Brief Description: Restoring the preferential timber industry business and occupation tax rate to the manufacture of environmentally responsible surface material products from recycled paper.
Sponsors: Representatives Kessler, VanDeWege, Blake, Williams and McIntire.
Brief Summary of Bill |
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Hearing Date: 1/30/08
Staff: Don Taylor (786-7388).
Background:
Washington's principal tax on businesses is the state business and occupation (B&O) tax. The
B&O tax applies to the gross receipts derived from engaging in business. Although the tax does
not reflect the cost of doing business, there are a variety of exemptions, deductions and other tax
incentives permitted by law. Major tax rates are 0.484 percent for manufacturing and
wholesaling; 0.471 percent for retailing, and 1.5 percent for services; a variety of lower rates also
apply to specific business activities. The B&O tax generates about 16 percent of all state tax
collections; most of the receipts are deposited in the state general fund.
In 2006, the Legislature authorized a lower B&O tax rate for extracting and wholesaling of
timber and for manufacturing of timber and wood products. The applicable tax rate dropped
from 0.484 percent to 0.4235 percent for fiscal year 2007 and then to 0.2904 starting on July 1,
2007. This rate is scheduled to remain in effect until June 30, 2024.
Summary of Bill:
Eligible products that qualify for the reduced tax rate are broadened by the bill. The term
"timber products" would include recycled paper that is used in manufacturing of biocomposite
surface products and the term "wood products" would include biocomposite surface products.
Definitions and requirements for these items are provided. At least 50 percent of the fiber
content of recycled paper must be post-consumer waste which would otherwise be disposed of as
solid waste. Biocomposite surface products must contain at least 50 percent recycled paper and
have a bonding agent consisting of nonpetroleum-based phenolic resin.
The provisions are retroactive to July 1, 2007.
Appropriation: None.
Fiscal Note: Available.
Effective Date: The bill takes effect 90 days after adjournment of session in which bill is passed.