SENATE BILL REPORT

HB 917

BYRepresentative Appelwick

Providing for an excise tax on storage and warehouse businesses.

House Committe on Ways & Means/Revenue

Senate Committee on Ways & Means

Senate Hearing Date(s):April 1, 1987

Senate Staff:Stephen Rose (786-7443)

AS OF MARCH 31, 1987

BACKGROUND:

Before 1985, all warehouse businesses were subject to the public utility tax at the rate of 1.926 percent, except cold storage warehouses and cold storage lockers.  Cold storage warehouses were subject to business and occupation tax at the .484 percent rate.  Cold storage lockers were subject to business and occupation tax at the 1.5 percent rate.

In 1985, the Washington Court of Appeals ruled that mini-storage warehouse facilities were not subject to the public utility tax.  Generally, the business and occupation tax applies to businesses that are not subject to public utility tax.  However, many mini-storage businesses have claimed exemption from the business and occupation tax under the exemption for rentals of real estate.  If the real estate rental exemption does not apply, mini-storage warehouse businesses would be subject to the service and miscellaneous rate of 1.5 percent.

In 1986, the Legislature moved storage warehouses from the public utility tax to the business and occupation tax.  A rate of .484 percent was applied to these warehouse businesses.  However, in the 1986 legislation "storage warehouse" was defined so as to exclude mini-storage facilities.  Also, the 1986 legislation may be ambiguous as to the status of agricultural commodity warehouses, railroad freight sheds, and other public service business warehouses.

SUMMARY:

Agricultural commodity warehouses, railroad freight sheds, and other public service business warehouses are defined as "regulated warehouses" subject to the public utility tax.  This will make it clear that taxation of these businesses was not changed by the 1986 legislation.

Storage warehouses, cold storage warehouses, mini-storage warehouses, and cold storage lockers are all defined as "unregulated warehouses" subject to business and occupation tax at the .484 percent rate.  For storage warehouses and cold storage businesses, this merely continues current taxation.  For mini-storage businesses, this is a decrease compared to the public utility tax imposed before the 1985 court case, but an increase for those mini-storage businesses which have claimed exemption from tax as rentals of real estate.  For cold storage lockers, this is a decrease in tax rate.

Fiscal Note:    requested