HOUSE BILL REPORT

SSB 6033

As Amended by the House

BYSenate Committee on Ways & Means (originally sponsored by Senators Newhouse, Hansen, Benitz and Deccio)

Exempting from business and occupation tax wholesale sales of hops for shipment out of state.

House Committe on Ways & Means/Revenue

Majority Report:  Do pass.  (8)

      Signed by Representatives Appelwick, Chair; Basich, Holland, Madsen, Rust, Taylor, Valle and Winsley.

House Staff:Susan Kavanaugh (786-7145)

AS PASSED HOUSE APRIL 17, 1987

BACKGROUND:

Under long standing Department of Revenue practice, Business and Occupation taxes were levied on hop brokers and dealers on the value of the warehousing services and the charges for processing hops sold out of state.  Recent changes in this practice now make such brokers or dealers subject to Business and Occupation taxes on wholesaling functions and on the full value of hops processed under the "manufacturing-other" rate.

SUMMARY:

Amounts received by growers or dealers for hops shipped out of state for first use are exempt from the Business and Occupation tax, if these hops have been processed in this state.  Amounts charged for warehousing services or processing services are not exempt from the tax.

Revenue:    The bill has a revenue impact.

Fiscal Note:      Attached.

Effective Date:The bill contains an emergency clause and takes effect immediately.

House Committee ‑ Testified For:    G.L. Sanderson, Halverson & Applegate; and Paul Bergevin, S.S. Steiner.

House Committee - Testified Against:      None Presented.

House Committee - Testimony For:    Making hops into pellets or extracts is not manufacturing.  The hops industry provides jobs and has faced the same problems that plague other agricultural industries.  Hops warehousers can easily move out of state.  Tax would still be paid on processing and warehousing services.  The business and occupation tax rate for "other manufacturing", including hops, is higher than for other grains.

House Committee - Testimony Against:      None Presented.