BILL REQ. #:  Z-0174.3 

Read first time 01/16/13.   Referred to Committee on Finance.

     AN ACT Relating to increasing revenues dedicated to basic education purposes; amending RCW 66.24.290 and 82.04.29002; adding a new section to chapter 82.08 RCW; adding a new chapter to Title 82 RCW; providing an effective date; and declaring an emergency.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

Sec. 1   RCW 66.24.290 and 2010 1st sp.s. c 23 s 1301 are each amended to read as follows:
     (1) Any microbrewer or domestic brewery or beer distributor licensed under this title may sell and deliver beer and strong beer to holders of authorized licenses direct, but to no other person, other than the board. Any certificate of approval holder authorized to act as a distributor under RCW 66.24.270 ((shall)) must pay the taxes imposed by this section.
     (a) Every such brewery or beer distributor ((shall)) must report all sales to the board monthly, pursuant to the regulations, and ((shall)) must pay to the board as an added tax for the privilege of manufacturing and selling the beer and strong beer within the state a tax of one dollar and thirty cents per barrel of thirty-one gallons on sales to licensees within the state and on sales to licensees within the state of bottled and canned beer, including strong beer, ((shall)) must pay a tax computed in gallons at the rate of one dollar and thirty cents per barrel of thirty-one gallons.
     (b) Any brewery or beer distributor whose applicable tax payment is not postmarked by the twentieth day following the month of sale will be assessed a penalty at the rate of two percent per month or fraction thereof. Beer and strong beer ((shall)) must be sold by breweries and distributors in sealed barrels or packages.
     (c) The moneys collected under this subsection ((shall)) must be distributed as follows: (i) Three-tenths of a percent ((shall)) must be distributed to border areas under RCW 66.08.195; and (ii) of the remaining moneys: (A) Twenty percent ((shall)) must be distributed to counties in the same manner as under RCW 66.08.200; and (B) eighty percent ((shall)) must be distributed to incorporated cities and towns in the same manner as under RCW 66.08.210.
     (d) Any licensed retailer authorized to purchase beer from a certificate of approval holder with a direct shipment endorsement or a brewery or microbrewery ((shall)) must make monthly reports to the liquor control board on beer purchased during the preceding calendar month in the manner and upon such forms as may be prescribed by the board.
     (2) An additional tax is imposed on all beer and strong beer subject to tax under subsection (1) of this section. The additional tax is equal to two dollars per barrel of thirty-one gallons. All revenues collected during any month from this additional tax ((shall)) must be deposited in the state general fund by the twenty-fifth day of the following month.
     (3)(a) An additional tax is imposed on all beer and strong beer subject to tax under subsection (1) of this section. The additional tax is equal to ninety-six cents per barrel of thirty-one gallons through June 30, 1995, two dollars and thirty-nine cents per barrel of thirty-one gallons for the period July 1, 1995, through June 30, 1997, and four dollars and seventy-eight cents per barrel of thirty-one gallons thereafter.
     (b) The additional tax imposed under this subsection does not apply to the sale of the first sixty thousand barrels of beer each year by breweries that are entitled to a reduced rate of tax under 26 U.S.C. Sec. 5051, as existing on July 1, 1993, or such subsequent date as may be provided by the board by rule consistent with the purposes of this exemption.
     (c) All revenues collected from the additional tax imposed under this subsection (3) ((shall)) must be deposited in the state general fund.
     (4) An additional tax is imposed on all beer and strong beer that is subject to tax under subsection (1) of this section that is in the first sixty thousand barrels of beer and strong beer by breweries that are entitled to a reduced rate of tax under 26 U.S.C. Sec. 5051, as existing on July 1, 1993, or such subsequent date as may be provided by the board by rule consistent with the purposes of the exemption under subsection (3)(b) of this section. The additional tax is equal to one dollar and forty-eight and two-tenths cents per barrel of thirty-one gallons. By the twenty-fifth day of the following month, three percent of the revenues collected from this additional tax ((shall)) must be distributed to border areas under RCW 66.08.195 and the remaining moneys ((shall)) must be transferred to the state general fund.
     (5)(a) From June 1, 2010, through ((June 30, 2013)) December 31, 2016, an additional tax is imposed on all beer and strong beer subject to tax under subsection (1) of this section. The additional tax is equal to fifteen dollars and fifty cents per barrel of thirty-one gallons.
     (b) The additional tax imposed under this subsection does not apply to the sale of the first sixty thousand barrels of beer each year by breweries that are entitled to a reduced rate of tax under 26 U.S.C. Sec. 5051 of the federal internal revenue code, as existing on July 1, 1993, or such subsequent date as may be provided by the board by rule consistent with the purposes of this exemption.
     (c) All revenues collected from the additional tax imposed under this subsection ((shall)) must be deposited in the ((state general fund)) education legacy trust account created in RCW 83.100.230.
     (6) The board may make refunds for all taxes paid on beer and strong beer exported from the state for use outside the state.
     (7) The board may require filing with the board of a bond to be approved by it, in such amount as the board may fix, securing the payment of the tax. If any licensee fails to pay the tax when due, the board may forthwith suspend or cancel his or her license until all taxes are paid.

Sec. 2   RCW 82.04.29002 and 2010 1st sp.s. c 23 s 1101 are each amended to read as follows:
     (1) Beginning May 1, 2010, through ((June 30, 2013)) December 31, 2016, an additional rate of tax of 0.30 percent is added to the rate provided for in RCW 82.04.255, 82.04.285, and 82.04.290(2)(a). All revenues collected from the additional tax under this section must be deposited into the education legacy trust account created in RCW 83.100.230.
     (2)(a) The additional rate in subsection (1) of this section does not apply to persons engaging within this state in business as a hospital. "Hospital" has the meaning provided in chapter 70.41 RCW but also includes any hospital that comes within the scope of chapter 71.12 RCW if the hospital is also licensed under chapter 70.41 RCW.
     (b) The additional rate in subsection (1) of this section does not apply to amounts received from performing scientific research and development services including but not limited to research and development in the physical, engineering, and life sciences (such as agriculture, bacteriological, biotechnology, chemical, life sciences, and physical science research and development laboratories or services).

NEW SECTION.  Sec. 3   (1) The legislature intends to impose a new excise tax on taxable fuel to provide funding for state allocations to school districts for pupil transportation purposes under chapter 28A.160 RCW. The proceeds of the tax are not intended to be used in any way for "highway purposes" as that term is used in Article II, section 40 of the Washington Constitution.
     (2) It is the intent and purpose of this chapter to impose a tax on the distribution of taxable fuel in this state and that the tax applies to the first distribution of taxable fuel in this state by a person who is not exempt from the tax.

NEW SECTION.  Sec. 4   Unless the context clearly requires otherwise, the definitions in or incorporated by this section apply throughout this chapter.
     (1) "Department" means the department of revenue.
     (2) "Diesel fuel" means any fuel that is sold for use in diesel-powered engines and is represented or sold as diesel fuel, biodiesel fuel, a blend of biodiesel fuel and diesel fuel, marine gasoil, distillate marine diesel, blended marine diesel, intermediate fuel oil, and residual fuel oil. "Diesel fuel" includes undyed diesel fuel, diesel fuel that meets the dyeing and marking requirements prescribed by federal regulations adopted under the authority of 26 U.S.C. Sec. 4082, and emulsified diesel fuel. "Diesel fuel" does not include heating oil unless sold for use in diesel-powered engines; kerosene, including kerosene-type jet fuel; liquefied petroleum gas; natural gas; or alcohol.
     (3) "Distribute" or "distribution" means any of the activities that constitute a taxable event.
     (4) "Distributor" means a person that distributes taxable fuel.
     (5) "First taxable event" means the first distribution of taxable fuel in this state that is not exempt from the tax imposed by this chapter.
     (6)(a) "Gasoline" means a liquid product of petroleum that is represented or sold as gasoline or that is designed for use in spark-ignition internal combustion engines. The term includes conventional gasoline; all types of gasoline blends, including ethanol-blended gasoline, oxygenated gasoline, and reformulated gasoline; and aviation gasoline, which means all special grades of gasoline suitable for use in aviation reciprocating engines.
     (b) "Gasoline" does not include:
     (i) The products commonly known as diesel fuel, fuel oil, coal oil, or kerosene, except when any such product is mixed or combined with gasoline; and
     (ii) Blendstock, not sold or represented as gasoline, that is intended to be further refined or blended before sale or use as gasoline.
     (7) "Person" has the same meaning as in RCW 82.04.030, except that "person" does not include any municipal corporation, political subdivision, or the United States and any of its departments, agencies, and instrumentalities.
     (8) "Removed" has the same meaning as "removal" in RCW 82.36.010.
     (9) "Tax" means the tax imposed in this chapter.
     (10) "Taxable event" means any of the following activities conducted in this state:
     (a) The removal of taxable fuel at a terminal or refinery rack;
     (b) The removal of taxable fuel at a refinery or terminal other than at a refinery or terminal rack;
     (c) The entry of taxable fuel into this state other than by pipeline or vessel, if the taxable fuel will be sold in this state; or
     (d) The wholesale sale of taxable fuel or the removal of taxable fuel, unless there was a prior distribution of the taxable fuel in this state resulting in the imposition of the tax under this chapter.
     (11) "Taxable fuel" means gasoline and diesel fuel.
     (12) "Wholesale value" means either:
     (a) The gross proceeds of the wholesale sale by the taxpayer of the taxable fuel distributed in this state; or
     (b) If the taxpayer did not make a wholesale sale of the taxable fuel distributed in this state, the fair market wholesale value, determined as nearly as possible according to the wholesale selling price of taxable fuel of like quality and character at the place of the first taxable event, in accordance with rules of the department.
     (13) The definitions in chapters 82.04 and 82.36 RCW apply to this chapter to the extent they do not conflict with any provision of this chapter. References to "motor vehicle fuel" or "motor fuel" in the definitions incorporated into this chapter from chapter 82.36 RCW must be construed to mean, depending on the context, gasoline, diesel fuel, or both gasoline and diesel fuel, for purposes of this chapter.

NEW SECTION.  Sec. 5   (1) A tax is levied for the privilege of distributing taxable fuel in this state. The tax applies to the first taxable event and is imposed on the distributor of the taxable fuel. The tax is equal to the wholesale value of the taxable fuel distributed in this state multiplied by the rate of:
     (a) Beginning July 1, 2013, through June 30, 2015, 1.85 percent;
     (b) Beginning July 1, 2015, through June 30, 2017, 2.91 percent; and
     (c) Beginning July 1, 2017, 4.62 percent.
     (2) If the tax is not paid by the date due, the department may collect the tax from the distributor liable for the tax or any person that subsequently distributes the taxable fuel. If the tax is paid by any distributor other than the taxable distributor, the amount of tax paid constitutes a debt owed by the taxable distributor to the distributor that paid the tax.
     (3) The tax applies to the distribution of taxable fuel regardless of whether it is intended to be used for on or off-road purposes or in a motor vehicle.
     (4) The department must collect the tax. Chapter 82.32 RCW applies to the tax. The tax reporting frequency for the tax must coincide with the taxpayer's reporting frequency for the tax imposed in chapter 82.04 RCW.
     (5) The tax is in addition to all other taxes imposed under this title on the same taxable event or with respect to the same taxable fuel.
     (6) The proceeds of the tax must be deposited into the education legacy trust account created in RCW 83.100.230. Taxes collected under this chapter may be spent only for state allocations to school districts for pupil transportation purposes under chapter 28A.160 RCW.

NEW SECTION.  Sec. 6   A person subject to the tax imposed by this chapter is entitled to a deduction under this section if the taxpayer is also entitled to a handling loss deduction under RCW 82.36.029 or a refund or credit under RCW 82.38.180 (4), (5), or (6), with respect to the distribution of the same taxable fuel. The deduction from the measure of tax is equal to the wholesale value of the same gallonage of taxable fuel for which the taxpayer was entitled to claim a deduction under RCW 82.36.029 or refund or credit under RCW 82.38.180 (4), (5), or (6).

NEW SECTION.  Sec. 7   (1) A taxpayer is entitled to a credit of the tax paid to the department with respect to taxable fuel sold by the taxpayer but for which the taxpayer has received no consideration from or on behalf of the purchaser. The amount of the tax credit equals the amount of tax imposed by this chapter with respect to such sales. Such credit may be taken on a tax return subsequent to the tax return on which the tax was paid over to the department.
     (2) If a credit is taken under subsection (1) of this section and the debt is subsequently collected in whole or in part, the tax on the amount collected must be paid and reported on the tax return filed for the period in which the collection is made.

NEW SECTION.  Sec. 8   (1) A credit is allowed against the tax for any similar tax paid to another state with respect to the same taxable fuel. The amount of the credit may not exceed the tax liability arising under this chapter with respect to that taxable fuel.
     (2) For purposes of this section, the following definitions apply:
     (a)(i) "Similar tax" means a tax:
     (A) That is imposed on the privilege of engaging in any of the activities described in section 4(10)(a) through (d) of this act, and that is not generally imposed on other activities or privileges;
     (B) That is measured by the gross proceeds of the wholesale sale of taxable fuel or according to the wholesale selling price of taxable fuel of like quality and character; and
     (C) That would not, by reason of allowable deductions or credits, constitute a net income or value added tax.
     (ii) "Similar tax" does not include any tax on the extraction, severance, or production of the oil refined into taxable fuel or a tax on the refining of crude oil into taxable fuel.
     (iii) For purposes of this subsection (2)(a), "taxable fuel" includes fuel excise taxes that have either a narrower or broader tax base than the tax imposed by this chapter, as long as the tax is imposed only on liquid fuels and applies to gasoline and diesel fuel, regardless of how those terms are defined for purposes of the tax.
     (b) "State" means (i) a state of the United States other than Washington, or any political subdivision of such other state; (ii) the District of Columbia, the Commonwealth of Puerto Rico, and any territory or possession of the United States; (iii) a federally recognized Indian tribe; and (iv) any foreign country or political subdivision of a foreign country.

NEW SECTION.  Sec. 9   The following are exempt from the tax:
     (1) The distribution of taxable fuel exported outside this state. Taxable fuel carried from this state in the fuel tank of a motor vehicle, vessel, aircraft, or other transportation equipment is not considered to be exported outside this state; and
     (2) Persons or activities that the state is prohibited from taxing under the Constitution of this state or the Constitution or laws of the United States.

NEW SECTION.  Sec. 10   The department may adopt any rules it considers necessary or useful in administering this chapter.

NEW SECTION.  Sec. 11   The tax applies to taxable fuel that was removed in this state, entered this state, or that was sold in this state, before the effective date of this section, if a subsequent distribution of the taxable fuel occurs in this state on or after the effective date of this section by a person not exempt from the tax. In such cases, the tax is the responsibility of the first person to distribute the taxable fuel on or after the effective date of this section and, as applicable, any subsequent distributor as provided in section 5(2) of this act.

NEW SECTION.  Sec. 12   Sections 3 through 11 of this act constitute a new chapter in Title 82 RCW.

NEW SECTION.  Sec. 13   A new section is added to chapter 82.08 RCW to read as follows:
     (1) If either contingency in RCW 82.08.050(12) occurs, the department, in consultation with the economic and revenue forecast work group created in RCW 82.33.040, must annually estimate the anticipated net increase in state sales tax revenues resulting from remote sellers collecting and remitting sales tax on retail sales to buyers located in this state.
     (2) Annually, beginning in the fiscal year during which either of the contingencies in RCW 82.08.050(12) occurred, the department must notify the state treasurer of the estimated amount determined under subsection (1) of this section for that fiscal year. On the last working day of the fiscal year, the state treasurer must transfer such amount from the general fund to the education legacy trust account created in RCW 83.100.230.
     (3) For purposes of this section, "net increase" means the increase in state sales tax revenues received by the state resulting from remote sellers collecting and remitting sales tax on retail sales to buyers located in this state, which must reflect any vendor compensation the state is required to provide sellers as a condition to requiring remote sellers to collect sales tax on sales to Washington consumers.

NEW SECTION.  Sec. 14   If any provision of this act or its application to any person or circumstance is held invalid, the remainder of the act or the application of the provision to other persons or circumstances is not affected.

NEW SECTION.  Sec. 15   This act is necessary for the immediate preservation of the public peace, health, or safety, or support of the state government and its existing public institutions, and takes effect July 1, 2013.