SENATE BILL REPORT

SB 5267

BYSenators McDermott, Lee and Conner;by request of Department of Revenue

Exempting purchases with food coupons from sales and use tax.

Senate Committee on Ways & Means

Senate Hearing Date(s):January 27, 1987

Majority Report:  Do pass.

      Signed by Senators McDermott, Chairman; Gaspard, Vice Chairman; Bluechel, Cantu, Craswell, Deccio, Kreidler, Lee, Moore, Rinehart, Talmadge, Warnke, Williams, Wojahn, Zimmerman.

Senate Staff:Stephen Rose (786-7443)

                  February 20, 1987

AS PASSED SENATE, FEBRUARY 20, 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.

Fiscal Note:      available

Effective Date:October 1, 1987

Senate Committee - Testified: Barney McClure, Department of Revenue