BILL REQ. #: H-1093.1
State of Washington | 60th Legislature | 2007 Regular Session |
Read first time 01/30/2007. Referred to Committee on Housing.
AN ACT Relating to restoring the American dream by eliminating the state sales tax on construction labor and services in counties where the first-time home buyers housing affordability index shows that housing is not affordable; adding a new section to chapter 82.08 RCW; and creating a new section.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:
NEW SECTION. Sec. 1 The legislature finds that first-time home
buyers in Washington state have been priced out of the housing market
in many counties. The legislature finds that many organizations,
including local governments, have recognized the affordable housing
crisis for first-time home buyers. The legislature finds that, for
example, as reported in King county's benchmark growth report, "buying
a first home remains extremely difficult for those under one hundred
twenty percent of median income."
The legislature further finds that the state sales tax on
construction labor and services contributes to the high cost of housing
in many Washington counties, and that eliminating this tax will reduce
housing prices. The legislature also recognizes that the Washington
state tax structure study committee suggested that exempting
construction labor from the state sales tax would improve economic
vitality and harmonize Washington's sales tax provisions with other
nearby states.
The legislature intends to make housing more affordable for first-time home buyers in counties where housing is currently not affordable
for first-time home buyers. The legislature intends to do this by
eliminating the state sales tax on construction labor and services in
counties where the first-time buyer housing affordability index
demonstrates that housing is not affordable for first-time home buyers.
NEW SECTION. Sec. 2 A new section is added to chapter 82.08 RCW
to read as follows:
(1)(a) As used in this chapter, "first-time buyer housing
affordability index" means the index, as determined by the Washington
center for real estate research at Washington State University, that
measures the ability of a typical renter household to afford the
purchase of a typical starter home by assuming: (i) The household will
purchase a home priced at eighty-five percent of area median household
income with a ten percent downpayment; (ii) the home mortgage loan is
for a term of thirty years at the prevailing average fixed rate of
interest; (iii) the potential first-time home buyer earns seventy
percent of the area median household income and twenty-five percent of
household income can be used for principal and interest payments.
(b) For purposes of this chapter, a first-time buyer housing
affordability index of: (i) One hundred indicates that a household of
the defined income can afford a home of the defined price; (ii) less
than one hundred indicates that a household of the defined income
cannot afford a home of the defined price without spending more than
twenty-five percent of their income on mortgage payments; and (iii)
greater than one hundred indicates that a household of the defined
income can afford a home of the defined price while spending less than
twenty-five percent of their income on mortgage payments.
(2)(a) In any county in which the first-time buyer housing
affordability index, as defined by subsection (1) of this section and
as determined by the Washington center for real estate research at
Washington State University, is less than one hundred for three
quarters in any given year, or in any city located within a county in
which the first-time buyer housing affordability index, as defined by
subsection (1) of this section and as determined by the Washington
center for real estate research at Washington State University, is less
than one hundred for three quarters in any given year, for the
following two years, the tax imposed by RCW 82.08.020 does not apply to
the sale of or charge made for labor and services rendered in respect
to clearing land, moving earth, site preparation, constructing,
repairing, decorating, renovating, expanding, or improving of new or
existing buildings, structures, facilities, or any other improvement
under, upon, or above real property of or for new residential
construction within the specified county. This exemption from sales
tax is limited to the state share of the sales tax and does not apply
to any local sales tax.
(b) The year-long period measured by the Washington center for real
estate research under (a) of this subsection shall begin and end in the
third quarter of the calendar year. The time period for which the
exemption from the state sales tax under this chapter is in place under
(a) of this subsection shall begin January 1st of the year following
the determination by the Washington center for real estate research.