SENATE BILL REPORT

HB 67

BYRepresentatives Rayburn, Nealey, Prince, Kremen, McLean, C. Smith, Fuhrman, Betrozoff, Amondson, P. King, Chandler, Hargrove, Lewis and Doty

Exempting the conditioning of seed for out-of-state sales from business and occupation taxation.

House Committe on Agriculture & Rural Development

Rereferred House Committee on Ways & Means/Revenue

Senate Committee on Ways & Means

Senate Hearing Date(s):March 31, 1987

Majority Report:  Do pass.

      Signed by Senators McDermott, Chairman; Gaspard, Vice Chairman; Bauer, Bluechel, Craswell, Deccio, Fleming, Kreidler, Lee, McDonald, Moore, Owen, Talmadge, Vognild, Warnke.

Senate Staff:William Bafus (786-7437)

                  March 31, 1987

AS REPORTED BY COMMITTEE ON WAYS & MEANS, MARCH 31, 1987

BACKGROUND:

State law imposes a business and occupation (B & O) tax on manufacturing activities at a rate equal to 0.484 percent of the value of the products manufactured.  The rate is composed of a base rate of 0.44 percent plus a 10 percent tax surcharge.

The activities that qualify as manufacturing activities for the purpose of that tax are defined broadly by statute.  In 1985, the State Board of Tax Appeals upheld a determination by the Department of Revenue that the conditioning of vegetable seeds by a seed company constituted "manufacturing" for B & O tax purposes. Certain exemptions from the definition and reduced rates for certain categories of manufacturing are provided by statute.

State law also imposes the B & O tax on certain wholesale and retail sales.

SUMMARY:

Conditioning of seed for use in planting is exempted from the definition of manufacturing for business and occupation taxation purposes.

Revenue:    An exemption for the conditioning of certain seed from the B & O tax on manufacturing activities is provided.

Fiscal Note:      available

Senate Committee - Testified: No one