PETROLEUM PRODUCTS TAX

NOTE: Because of sufficient funds in the pollution liability insurance program trust account, collection of this tax was suspended on July 1, 1992 pursuant to RCW 82.23A.020. It is not expected to be reimposed during the 1999-01 Biennium. The underground storage tank program is scheduled to expire on June 1, 2001 per RCW 82.23A.902.

82.23A.030(1) SUCCESSIVE USES OF PETROLEUM

Description: Successive possession of petroleum products that were previously subject to the 0.5 percent petroleum products tax is exempt from the tax.

Purpose: The tax is intended to apply only to the first use of petroleum products in the state.

Category/Year Enacted: Not intended in the tax base; 1989.

Primary Beneficiaries: Wholesalers, distributors and retailers of petroleum products.

Conflict With Other Programs: None evident.

Tax Savings ($000) The tax is currently in hiatus and is not expected to be reimposed.

82.23A.030(2) DOMESTIC USES OF PETROLEUM

Description: Petroleum that is used by persons (not firms) for personal or domestic purposes and not a business use is exempt from petroleum products tax.

Purpose: The tax is intended to apply only to businesses that import or produce petroleum products in Washington.

Category/Year Enacted: Individuals; 1989.

Primary Beneficiaries: Persons who bring motor vehicle fuel and other products into the state (e.g., in vehicle fuel tanks).

Conflict With Other Programs: None evident.

Tax Savings ($000) The tax is currently in hiatus and is not expected to be reimposed.

82.23A.030(3) CONSTITUTIONAL EXEMPTIONS

Description: Petroleum products tax does not apply to persons or activities which the state cannot tax under the U.S. Constitution.

Purpose: This exemption covers first use of petroleum products in Washington by the military and Indian tribes, as well as products that are in interstate commerce (i.e., only passing through the state and not actually used in Washington).

Category/Year Enacted: Government; 1989.

Primary Beneficiaries: The federal government including the military and the Department of Energy and Indian tribes.

Conflict With Other Programs: None evident.

Tax Savings ($000) The tax is currently in hiatus and is not expected to be reimposed.

82.23A.030(4) PRIOR POSSESSION OF PETROLEUM PRODUCTS

Description: Possession of petroleum before the effective date of the tax, July 1, 1989, is exempt.

Purpose: To prevent the tax from applying to petroleum on which the owners did not anticipate having to pay the tax.

Category/Year Enacted: Not intended in the tax base; 1989.

Primary Beneficiaries: Existing petroleum refiners and importers.

Conflict With Other Programs: None evident.

Tax Savings ($000): None; this exemption is no longer applicable.

82.23A.030(5) FUEL USED IN PROCESSING

Description: Exempt from petroleum products tax are the following products if they are used in processing of petroleum: (1) natural gas, (2) petroleum coke, or (3) liquid fuel or fuel gas.

Purpose: To exclude from tax fuel that is consumed in production and to only tax those products which are ultimately sold at retail.

Category: Not intended in the tax base; 1989.

Primary Beneficiaries: Petroleum refiners.

Conflict With Other Programs: None evident.

Tax Savings ($000) The tax is currently in hiatus and is not expected to be reimposed.

82.23A.030(6) EXPORTED PETROLEUM

Description: Petroleum products that are exported for use outside of Washington are exempt from tax.

Purpose: The tax is intended to apply only to products that are ultimately sold and used in this state.

Category/Year Enacted: Not intended in the tax base; 1989.

Primary Beneficiaries: Petroleum exporters.

Conflict With Other Programs: None evident.

Tax Savings ($000) The tax is currently in hiatus and is not expected to be reimposed.

82.23A.030(7) PACKAGED PETROLEUM PRODUCTS

Description: Items which are already packaged are not subject to petroleum products tax.

Purpose: The purpose of the tax is to generate funds to provide adequate insurance and funding for programs to clean up discharges from leaking underground petroleum storage tanks. Presumably, packaged products will not be stored in underground tanks and will not have the potential to be a pollution problem.

Category/Year Enacted: Not intended in the tax base; 1989.

Primary Beneficiaries: Importers of packaged petroleum products.

Conflict With Other Programs: None evident.

Tax Savings ($000) The tax is currently in hiatus and is not expected to be reimposed.

82.23A.040(1) CREDIT FOR FUEL EXPORTED IN FUEL TANKS

Description: A credit is allowed from petroleum products tax for fuel that is exported from the state in the fuel tank of any vehicle including airplanes, ships or trucks.

Purpose: The tax is paid upon the first use of the products in Washington. Fuel that is subsequently shipped out of state after being refined presumably will not be stored in underground tanks in this state. Therefore, a credit for the amount of tax previously paid upon exported products is allowed.

Category/Year Enacted: Not intended in the tax base; 1989.

Primary Beneficiaries: Refiners and wholesalers that deliver their products outside the state.

Conflict With Other Programs: None evident.

Tax Savings ($000) The tax is currently in hiatus and is not expected to be reimposed.

82.23A.040(2) CREDIT FOR OTHER STATES' TAXES

Description: The amount of any similar taxes previously paid in other states upon the same petroleum product is allowed to be credited against the Washington tax. To qualify, such taxes must be imposed upon wholesale value and not constitute an income or value-added tax.

Purpose: To avoid the possibility of double taxation of the same product. Presumably this credit reflects the 1987 U.S. Supreme Court decision concerning the potential for the Washington B&O tax to discriminate against interstate commerce unless such credits are allowed.

Category/Year Enacted: Commerce; 1989.

Primary Beneficiaries: Importers of products from jurisdictions with similar petroleum products taxes.

Conflict With Other Programs: None evident.

Tax Savings ($000) The tax is currently in hiatus and is not expected to be reimposed.