SENATE BILL REPORT

EHB 1507

BYRepresentatives Appelwick, Taylor, Grimm, Haugen, Holland and Locke; by request of Governor Gardner

Revising the sales and use tax exemptions for food products sold by vendors required to have a worker's permit under RCW 69.06.010.

House Committe on Ways & Means/Revenue

Senate Committee on Ways & Means

Senate Hearing Date(s):February 26, 1988; February 27, 1988

Majority Report:  Do pass as amended.

      Signed by Senators McDonald, Chairman; Bluechel, Deccio, Fleming, Gaspard, Johnson, Lee, Moore, Newhouse, Smith, Talmadge, Vognild, Williams, Wojahn, Zimmerman.

Senate Staff:William Bafus (786-7715)

                  March 1, 1988

AS REPORTED BY COMMITTEE ON WAYS & MEANS, FEBRUARY 27, 1988

BACKGROUND:

Food sold for human consumption is generally exempt from the retail sales tax.  The exemption does not apply for the following:  (1) when the food product is sold in an establishment having tables, chairs or counters; or (2) when the food product is sold for immediate consumption on or near the premises even though the food may be packaged or wrapped; or (3) when the food product is sold for consumption within a place having an admission charge; or (4) when the food product is sold from a vending machine (in which case the tax is levied on 57 percent of the sales).

These provisions can result in unequal application of the tax.  For example, a deli having eating facilities has to charge tax on sandwiches even though they may be sold on a take out basis.  On the other hand, the same sandwich sold from a super market not having eating facilities is not subject to tax.

SUMMARY:

The sales tax is extended to sales of prepared food items for which retail vendors are required to have a food handler's permit in order to prepare the item for sale.  Sandwiches prepared or chicken cooked on the premises, deli trays, home delivered pizzas or meals, and salad bars are included.

Exemptions from the sales tax even though a food handler's permit is required are: raw meat and fish; meat and cheese sliced and wrapped by store employees; bakeries which only sell baked goods; baked goods when not sold as part of meals by bakeries; bulk foods sold from bins and barrels such as flour, fruits and vegetables; and food products prepared on the premises requiring further preparation, (except for uncooked pizzas).

SUMMARY OF PROPOSED SENATE AMENDMENT:

Language exempting from the sales and use tax food products, prepared on the premises but requiring further preparation, is deleted.  A new section, declaring an emergency and providing an effective date is added.

Appropriation:    none

Revenue:    yes

Fiscal Note:      available

Senate Committee - Testified: William Wilkerson, Department of Revenue (for); Jeff Gibbs, Washington State Association of Food Dealers; Jan Gee, Washington Association of Retailers; Greg Pierce, Washington State Department of Revenue