SENATE BILL REPORT

SHB 1696

BYHouse Committee on Ways & Means/Revenue (originally sponsored by Representatives Grant, Appelwick, Baugher, Nealey, Rayburn, Brooks and Kremen)

Revising excise tax exemptions on agriculture.

House Committe on Ways & Means/Revenue

Senate Committee on Agriculture

Senate Hearing Date(s):February 25, 1988; February 26, 1988

Majority Report:  Do pass.

      Signed by Senators Anderson, Vice Chairman; Bailey, Hansen, Rinehart.

Senate Staff:John Stuhlmiller (786-7446)

                  February 26, 1988

AS REPORTED BY COMMITTEE ON AGRICULTURE, FEBRUARY 26, 1988

BACKGROUND:

State law exempts excise taxes from persons growing or producing for sale commodities on their own lands.  Recently, a question was raised by farmers as to whether or not the exemption applied to CRP (conservation reserve program) lands which are held out of production as required under the federal CRP program.  Farmers are paid an average of $50 per acre to take such lands out of production.

Farmers in the CRP program must maintain CRP lands while they are out of production according to certain standards.  Farmers purchase seeds, fertilizers, sprays and other materials to maintain CRP status.

SUMMARY:

All income in the form of federal subsidies under the federal CRP program are exempt from business and occupation taxation.  All materials such as seed, fertilizers, and sprays used to maintain lands under CRP are exempt from sales and use taxation.

Appropriation:    none

Revenue:    yes

Fiscal Note:      requested January 27, 1988

Senate Committee - Testified: Karl Kupers, wheat grower (pro); Bill Fritz, Washington Food Processors Council (pro)