BILL REQ. #:  S-3234.2 

Read first time 01/16/14.   Referred to Committee on Agriculture, Water & Rural Economic Development.

     AN ACT Relating to a hazardous substance tax exemption for certain hazardous substances defined under RCW 82.21.020(1)(c) that are used as agricultural crop protection products and warehoused but not otherwise used, manufactured, packaged, or sold in this state; amending RCW 82.21.040; adding a new section to chapter 82.21 RCW; creating a new section; and providing an effective date.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

NEW SECTION.  Sec. 1   A new section is added to chapter 82.21 RCW to read as follows:
     The legislature finds that the agricultural industry is a vital component of Washington's economy, providing thousands of jobs throughout the state. The legislature further finds that Washington state is the ideal location for distribution centers for agricultural crop protection products because Washington is an efficient transportation hub for Pacific Northwest farmers. However, products being warehoused in the state are diminishing because agricultural crop protection products that are both produced and ultimately sold out-of-state are being redirected to out-of-state distribution centers because of Washington's tax burden. Relocation of this economic activity is detrimental to Washington's economy through the direct loss of jobs and tax revenue, in addition to the negative impact on the supply chain for Washington farmers. Therefore, it is the intent of the legislature to encourage the regional competitiveness of agricultural distribution by providing an exemption from the hazardous substance tax for agricultural crop protection products that are manufactured out-of-state, warehoused or transported in the state, but ultimately shipped and sold out of Washington state.

NEW SECTION.  Sec. 2   This section is the tax preference performance statement for the tax exemption contained in RCW 82.21.040. This performance statement is only intended to be used for subsequent evaluation of the tax preference. It is not intended to create a private right of action by any party or be used to determine eligibility for preferential tax treatment.
     (1) The legislature categorizes this tax exemption as one intended to retain jobs, as indicated in RCW 82.32.808(2)(c).
     (2) It is the legislature's specific public policy objective to retain existing jobs performed to warehouse and transport agricultural crop protection products. It is the legislature's intent to exempt only agricultural crop protection products that are shipped into Washington state, warehoused in the state, and ultimately shipped and sold out of Washington state from the hazardous substance tax, in order to reduce the cost of warehousing and shipping products that are held but not ultimately used in the state, thereby inducing out-of-state customers to utilize Washington as a transportation hub, thereby retaining existing jobs for warehousing such products in Washington state.
     (3) If a review finds that the average employment in the agricultural crop protection warehousing industry remains at least steady following the enactment of this preference, then the legislature intends to extend the expiration date of the tax preference.
     (4) In order to obtain the data necessary to perform the review in subsection (3) of this section, the joint legislative audit and review committee may refer to employment data available from the employment security department.

Sec. 3   RCW 82.21.040 and 1989 c 2 s 11 are each amended to read as follows:
     The following are exempt from the tax imposed in this chapter:
     (1) Any successive possession of a previously taxed hazardous substance. If tax due under this chapter has not been paid with respect to a hazardous substance, the department may collect the tax from any person who has had possession of the hazardous substance. If the tax is paid by any person other than the first person having taxable possession of a hazardous substance, the amount of tax paid shall constitute a debt owed by the first person having taxable possession to the person who paid the tax.
     (2) Any possession of a hazardous substance by a natural person under circumstances where the substance is used, or is to be used, for a personal or domestic purpose (and not for any business purpose) by that person or a relative of, or person residing in the same dwelling as, that person.
     (3) Any possession of a hazardous substance amount which is determined as minimal by the department of ecology and which is possessed by a retailer for the purpose of making sales to ultimate consumers. This exemption does not apply to pesticide or petroleum products.
     (4) Any possession of alumina or natural gas.
     (5)(a) Any possession of a hazardous substance as defined in RCW 82.21.020(1)(c) that is solely for use by a farmer as an agricultural crop protection product and warehoused in this state or transported to or from this state, provided that the person possessing the substance does not otherwise use, manufacture, package for sale, or sell the substance in this state.
     (b) For the purposes of this subsection (5), the following definitions apply:
     (i) "Farmer" has the same meaning as in RCW 82.04.213.
     (ii) "Use" has the same meaning as in RCW 82.12.010.
     (6) Persons or activities which the state is prohibited from taxing under the United States Constitution.
     (((6) Any persons possessing a hazardous substance where such possession first occurred before March 1, 1989.))

NEW SECTION.  Sec. 4   This act takes effect July 1, 2014.