HOUSE BILL REPORT

SHB 1696

BYHouse Committee on Ways & Means/Revenue (originally sponsored by Representatives Grant, Appelwick, Baugher, Nealey, Rayburn, Brooks and Kremen)

Revising excise tax exemptions on agriculture.

House Committe on Ways & Means/Revenue

Majority Report:  The substitute bill be substituted therefor and the substitute bill do pass.  (7)

      Signed by Representatives Appelwick, Chair; Basich, Dellwo, Holland, Schoon, Taylor and Winsley.

House Staff:Rick Wickman (786-7136)

AS PASSED HOUSE FEBRUARY 11, 1988

BACKGROUND:

State law exempts excise taxes from persons growing or producing for sale commodities on their own lands.  Recently, a question was raised by farmers as to whether or not the exemption applied to CRP (conservation reserve program) lands which are held out of production as required under the Federal CRP program.  Farmers are paid an average of $50 per acre to take such lands out of production.

Farmers in the CRP program must maintain CRP lands while they are out of production according to certain standards.  Farmers purchase seeds, fertilizers, sprays and other materials to maintain CRP status.

SUMMARY:

All income in the form of federal subsidies under the Federal CRP program are exempt from business and occupation taxation.  All materials such as seed, fertilizers, and sprays used to maintain lands under CRP are exempt from sales and use taxation.

Revenue:    The bill has a revenue impact.

Fiscal Note:      Requested January 27, 1988.

House Committee ‑ Testified For:    Representative Bill Grant, Representative Alex McLean, Bill Wilkerson, Department of Revenue.

House Committee - Testified Against:      None Presented.

House Committee - Testimony For:    Subsidies provided under the Federal conversation reserve program (CRP) to qualifying farmers to not produce agricultural crops should be exempt from business and occupation taxation in the same manner as income received from producing agricultural commodities.  In addition, materials and supplies necessary to maintain erodable lands in CRP status should be exempt from sales and use taxation.

House Committee - Testimony Against:      None Presented.