SENATE BILL REPORT

SB 5690

BYSenators West, Hansen and Patterson; by request of Department of Licensing

Changing provisions relating to the motor vehicle fuel tax.

Senate Committee on Transportation

Senate Hearing Date(s):February 23, 1989

Majority Report:  Do pass.

      Signed by Senators Patterson, Chairman; Nelson, Vice Chairman; Barr, Bender, Hansen, McMullen, Madsen, Thorsness.

Senate Staff:Louise Bray (786-7322)

                  March 15, 1989

AS PASSED SENATE, MARCH 14, 1989

BACKGROUND:

Under current law, out-of-state distributors who purchase motor vehicle or special fuel in Washington for export to another state or country must pay, in addition to the federal tax, the Washington State fuel tax.  The distributor then applies for a refund of those taxes.  The Department of Licensing has expedited the refund process, but it still creates a cash flow problem for out-of-state distributors.

No exemption currently exists for aircraft fuel purchased for export.

Under international law, foreign embassies and consulates and many of their personnel, as well as some international organizations, are generally exempt from paying motor fuel taxes.  In most cases the exemptions are contained in treaties to which the United States is a party.  The tax exemption is only granted to those representatives of foreign governments that give reciprocal exemptions to United States missions and personnel. Current Washington law gives a blanket exemption to all foreign embassies and consulates and their personnel.  The Office of Foreign Missions of the Department of State has requested that the statute be modified to ensure that the exemptions are granted only to those foreign governments that grant reciprocal privileges to the United States.  A list of eligible foreign governments will be provided to the Department of Licensing by the Office of Foreign Missions.

SUMMARY:

Out-of-state distributors purchasing motor vehicle or special fuel for export are exempt from paying Washington State fuel tax if the purchaser obtains from the selling distributor an invoice detailing the transaction. The invoice must be filed both with the Department of Licensing and the appropriate out-of-state agency.  Aircraft fuel falls within this export exemption and identical invoice requirements must be followed.

Eligible foreign government personnel are exempt from paying the tax on fuel.  The U.S. Department of State shall furnish a list of eligible governments to the Department of Licensing.

Appropriation:    none

Revenue:    none

Fiscal Note:      none requested

Senate Committee - Testified: Senator Jim West, prime sponsor; Merle Steffenson, Department of Licensing; Gene Newman, Department of Transportation