B&O TAX EXEMPTIONS: PUBLIC ACTIVITIES

82.04.312 SMALL WATER DISTRICTS

Description: This statute exempts from B&O tax amounts received for the provision of water services by: (1) water-sewer districts established under Title 57 RCW which have fewer than 1,500 connections, (2) irrigation districts established under Title 87 RCW which have fewer than 1,500 connections, and (3) qualified satellite systems pursuant to RCW 70.116.134 which have fewer than 200 connections. To qualify the rates charged by these districts must exceed 125 percent of the average statewide water rate, as determined by the Department of Health. The district must spend at least 90 percent of the value of the exemption on repair, equipment, maintenance and upgrading of the system.

Purpose: To assist small water providers whose systems are not economically efficient to operate.

Category/Year Enacted: Government; 1997.

Primary Beneficiaries: Small water, sewer and irrigation systems.

Conflict With Other Programs: None evident.

Tax Savings ($000): None; the impact is shown under the public utility tax. This statute is necessary so that such districts would pay neither the public utility nor the B&O tax.

82.04.395 PRINTING BY SCHOOLS

Description: School districts and educational service districts are exempt from B&O tax on the value of materials printed in-house, if the materials are exclusively for district use.

Purpose: The purpose is to support education. There are similar exemptions for printing by local government and libraries.

Category/Year Enacted: Government; 1979.

Primary Beneficiaries: School districts and educational service districts.

Conflict With Other Programs: None evident.

Tax Savings ($000): FY 2000 FY 2001 FY 2002 FY 2003
   
State taxes 50 52 55 57
Local taxes - - - - - - - -

If the exemption were repealed, would the estimated revenue be realized? Possibly, but other taxes would presumably have to be raised to make up the loss.

82.04.397 LOCAL GOVERNMENT PRINTING

Description: The value of materials printed in-house solely for their own use by counties and cities is exempt from business and occupation tax liability.

Purpose: The exemption supports local government and parallels similar exemptions for school districts and libraries.

Category/Year Enacted: Government; 1979.

Primary Beneficiaries: Counties, cities, and towns.

Conflict With Other Programs: None evident.

Tax Savings ($000): FY 2000 FY 2001 FY 2002 FY 2003
   
State taxes 35 37 39 41
Local taxes - - - - - - - -

If the exemption were repealed, would the estimated revenue be realized? Yes, although local taxes would presumably have to be raised to make up the loss.

82.04.408 HOUSING FINANCE COMMISSION

Description: Income that may accrue to the Housing Finance Commission is exempt from the B&O tax. Fees generated from bond issues and interest received from reserves are used for the general operation of the Commission.

Purpose: The purpose reflects legislative policy to not tax the specific activities of this agency.

Category/Year Enacted: Government; 1983.

Primary Beneficiaries: The Housing Finance Commission.

Conflict With Other Programs: None evident; however, other state agencies do not pay B&O tax on their operating revenues.

Tax Savings ($000): FY 2000 FY 2001 FY 2002 FY 2003
   
State taxes 52 53 54 55
Local taxes - - - - - - - -

If the exemption were repealed, would the estimated revenue be realized? Yes.

82.04.415 SAND AND GRAVEL FOR PUBLIC ROADS

Description: The cost of labor and services performed in the mining, sorting, crushing, etc. of sand and gravel taken from a pit owned by or leased to a city or county is exempt from B&O tax. The sand and gravel must be either placed on a street of the city or county or sold at cost to another city or county for use on public roads.

Purpose: The purpose reflects legislative policy to reduce the costs of road building materials for local governments. It also recognizes the administrative costs that would be required to determine the taxable value of rock and sand that is removed from a city or county owned pit by employees of the city or county.

Category/Year: Government; 1965.

Primary Beneficiaries: Cities and counties and the contractors who perform road work for them.

Conflict With Other Programs: None evident.

Tax Savings ($000): FY 2000 FY 2001 FY 2002 FY 2003
   
State taxes 146 153 161 169
Local taxes - - - - - - - -

If the exemption were repealed, would the estimated revenue be realized? Yes, although local taxes would presumably have to be raised to make up the loss.

82.04.416 2ND NARROWS BRIDGE

Description: Income derived from operation of state route 16 corridor transportation systems and facilities constructed and operated under RCW 47.46 is exempted from B&O tax. This statute addresses the second Narrows bridge; it exempts tolls received by the operator of the bridge and any other income.

Purpose: To lower the overall cost of operation of the bridge.

Category/Year: Tax Base; 1998.

Primary Beneficiaries: The operator of the bridge and ultimately drivers who utilize the facility.

Conflict With Other Programs: Income from other quasi-public operations operated by private firms on behalf of government are subject to business tax.

Tax Savings ($000): FY 2000 FY 2001 FY 2002 FY 2003*
   
State taxes - - - - - - - -
Local taxes - - - - - - - -

*It is assumed that completion of the bridge would not occur until after the end of FY 2003.

If the exemption were repealed, would the estimated revenue be realized? Yes.

82.04.418 GRANTS RECEIVED BY LOCAL GOVERNMENT

Description: Amounts received by municipal corporations or political subdivisions in the form of governmental grants are exempt from B&O tax.

Purpose: The exemption reflects the policy not to tax non-enterprise activities of local government. Also, it supports the social welfare services that the grants assist.

Category/Year Enacted: Government; 1983.

Primary Beneficiaries: Local governments that carry out social welfare programs which are funded by grants.

Conflict With Other Programs: None evident.

Tax Savings ($000): The impact is included under the deduction for income received in the form of governmental grants for health and social welfare services by local governments and nonprofit organizations (RCW 82.04.4297).

82.04.419 LOCAL GOVERNMENT BUSINESS INCOME

Description: Exempts local governments, including school districts and fire districts, from B&O tax on income from business-related activities, except utility or enterprise activities. The principal form of income exempted are funds received by one unit of government which represents charges for services rendered to other jurisdictions.

Purpose: The purpose is part of legislative policy not to tax government on the income it receives from performing public service activities, other than from enterprise activities.

Category/Year Enacted: Government; 1983.

Primary Beneficiaries: Local government.

Conflict With Other Programs: None evident.

Tax Savings ($000):* FY 2000 FY 2001 FY 2002 FY 2003
   
State taxes 9,799 10,618 11,505 12,466
Local taxes - - - - - - - -

*Includes local government deductions under RCW 82.04.4291.

If the exemption were repealed, would the estimated revenue be realized? Yes, although local taxes would presumably have to be raised to make up the loss.

82.04.600 PRINTING BY LIBRARIES

Description: Printing by libraries is exempt from B&O tax if the material is printed in their own facilities and is used for their own purposes. This section also includes cities, counties and school districts, but these are covered by other statutes, RCWs 82.04.395 and .397.

Purpose: The purpose reflects legislative policy not to tax public entities and services. Furthermore, these activities are recognized as internal functions which generate no income.

Category/Year Enacted: Government; 1979.

Primary Beneficiaries: Libraries and library districts.

Conflict With Other Programs: None evident.

Tax Savings ($000): FY 2000 FY 2001 FY 2002 FY 2003
   
State taxes 3 4 4 4
Local taxes - - - - - - - -
If the exemption were repealed, would the estimated revenue be realized? Yes, although local taxes would presumably have to be raised to make up the loss.