| Washington State House of Representatives Office of Program Research |
BILL ANALYSIS |
| Finance Committee | |
HB 3362
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: Providing tax incentives to encourage businesses to purchase highly energy efficient equipment.
Sponsors: Representative Kelley.
Brief Summary of Bill |
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Hearing Date: February 12, 2008.
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; several 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.
Energy Star: In 1992, the United States Environmental Protection Agency (EPA) introduced
Energy Star as a voluntary labeling program designed to identify and promote energy efficient
products to reduce greenhouse gas emissions. Computers and monitors were the first labeled
products. In 1995, the EPA expanded the label to additional office equipment products and
residential heating and cooling equipment. The Energy Star label is now on major appliances,
office equipment, lighting, home electronics, and other products. The EPA has also extended the
label to cover new homes and commercial and industrial buildings.
Consortium for Energy Efficiency (CEE): The CEE is a nonprofit organization comprised of
energy- efficiency organizations; electric, gas, and water utilities; research and development
organizations; state and provincial energy offices in the U.S. and Canada; and regional energy
programs. The CEE promotes the use of energy-efficient products, technologies, and services.
The CEE has adopted specifications for various levels of energy savings for a variety of products.
Summary of Bill:
A new credit is adopted against state B&O tax for certain small businesses for the amount of
state and local retail sale/use tax paid on certain types of commercial appliances which carry
Energy Star or CEE ratings for energy-efficiency:
a. Freezers and refrigerators
b. Washing machines
c. Ice makers
d. Gas convection ovens
e. Deep fat fryers
f. Hot food holding cabinets
g. Steam cookers
Eligible purchases of energy-efficient appliances must be made on or after July 1, 2008, and
before July 1, 2010. To qualify for the credit, the firm's gross income for the prior calendar year
must not exceed $750,000. Further, there is a cap on the amount of credit granted to all
taxpayers of $750,000.
The Department of Community, Trade and Economic Development (CTED) is required to report
on the energy and cost savings as a result of this tax incentive. The CTED report is due to the
Legislature on December 30, 2010.
The B&O tax credit expires on July 1, 2010.
Appropriation: None.
Fiscal Note: Available.
Effective Date: The bill takes effect July 1, 2008.