HOUSE BILL REPORT

HB 282

BYRepresentatives Appelwick and R. King;by request of Department of Revenue

Exempting purchases with food coupons from sales and use tax.

House Committe on Ways & Means/Revenue

Majority Report:     Do pass.  (9)

     Signed by Representatives Appelwick, Chair; Basich, Grimm, Holland, Madsen, Rust, Schoon, Valle and Winsley.

House Staff:Rick Wickman (786-7150)

AS PASSED HOUSE FEBRUARY 27, 1987

BACKGROUND:

Federal legislation (P.L. 99-198) stipulates that states may not tax purchases made with food stamps by a retail or sales tax. States that do tax purchases made with food stamps will become ineligible for the federal food stamp program.  The U.S Congress felt that the practice of states taxing food stamp purchases was an indirect subsidy to state and local governments, which was not intended.  Washington has until October 1, 1987, to bring its laws into compliance.

Washington State currently exempts most food items from the state sales and use taxes.  However, there are a few items that may be purchased with food stamps that are not exempt under state law. Major items which may be purchased with food stamps but are taxed include carbonated beverages, dietary supplements, garden seeds, bottled water, and ice.

SUMMARY:

Purchases made with food stamps are exempt from the retail sales and use taxes.  When purchases are made with both food stamps and cash, the cash shall be first applied to the purchases of food items exempt under the current statute.

Revenue:   The bill has a revenue impact.

Fiscal Note:    Attached.

Effective Date:This act shall take effect October 1, 1987.

House Committee ‑ Testified For:     Barney McClure, Department of Revenue.

House Committee - Testified Against: None Presented.

House Committee - Testimony For:     Exempt purchases made with food stamps from the retail sales and use tax.

House Committee - Testimony Against: None Presented.