HOUSE BILL REPORT
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.
As Passed Legislature
Title: An act relating to tax incentives to encourage businesses to purchase highly energy efficient equipment.
Brief Description: Providing tax incentives to encourage businesses to purchase highly energy efficient equipment.
Sponsors: By Representative Kelley.
Brief History:
Finance: 2/12/08 [DP].
Floor Activity:
Passed House: 2/14/08, 94-0.
Senate Amended.
Passed Senate: 3/11/08, 49-0.
House Concurred.
Passed House: 3/12/08, 95-2.
Passed Legislature.
Brief Summary of 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: 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 U.S. 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 United States 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 sales/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; and
(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.
Staff Summary of Public Testimony:
(In support) Support for the legislation was given by the prime sponsor and representatives of
environmental groups. It was noted that a large commercial appliance can achieve significant
energy reductions if it is rated as an Energy Star appliance or if it carries a CEE rating.
(With concerns) The $750,000 threshold in the bill is far too low. Nearly any grocery store or
major restaurant that would benefit from the B&O tax credit would have gross receipts in
excess of this level. Further, the two-year duration for the program will not be sufficiently
long to determine whether the incentive is truly effective.
(Opposed) None.
Persons Testifying: (In support) Representative Kelley, prime sponsor; and Kim Drury,
Northwest Energy Coalition.
(With concerns) Carolyn Hogue, Washington Food Industry.