PUBLIC UTILITY TAX DIFFERENTIAL RATES

82.16.020 URBAN TRANSPORTATION AND

(1d and e) VESSELS UNDER 65 FEET IN LENGTH

Description: Firms that operate vehicles for public use to convey persons or property for hire either: 1) entirely within a city or within five miles of a city or 2) between cities which are not more than five miles apart, are subject to tax at a rate of 0.642 percent rather than the general 3.852 percent rate. This rate also applies to vessels for hire which are less than 65 feet in length (not including charter fishing boats).

Purpose: The purpose is apparently to encourage the use of public transportation. Also, the lower tax rate may have reflected lower profit margins for urban transportation firms in the 1930s.

Category/Year Enacted: Economic development; 1935.

Primary Beneficiaries: Approximately 1,344 firms including local transit systems, taxi firms, intra-city delivery firms, charter boats (except for fishing), small tug boats, etc.

Conflict With Other Programs: None evident.

Tax Savings ($000): FY 2000 FY 2001 FY 2002 FY 2003
   
State taxes 11,093 11,518 11,959 12,417
Local taxes - - - - - - - -

If the preferential rate were repealed, would the estimated revenue be realized?

Yes; but a six-fold increase (0.642 to 3.852 percent) may drive firms out of business.

82.16.020(lf) MOTOR TRANSPORTATION

Description: Firms that transport persons or property for hire via truck, bus, taxi, and charter service (except urban transportation) are taxed at a rate of 1.926 percent rather than the rate of 3.852 percent which most other utility activities pay.

Purpose: The purposes are assumed to include: 1) the development of small business, 2) encouragement of trucking over rail transportation, 3) an incentive for trucking firms to locate in Washington, and perhaps (4) consideration of profit margins of trucking firms.

Category/Year Enacted: Economic development; 1935.

Primary Beneficiaries: Approximately 3,959 trucking, bus and charter companies and other carriers.

Conflict With Other Programs: None evident.

Tax Savings ($000): FY 2000 FY 2001 FY 2002 FY 2003
   
State taxes 16,061 16,879 17,738 18,641
Local taxes - - - - - - - -

If the preferential rate were repealed, would the estimated revenue be realized? Yes; but doubling the rate (1.926 to 3.852 percent) might drive some firms out of business.

82.16.020(1f) RAIL TRANSPORTATION

Description: Firms that transport persons or property via railroads and rail cars are taxed at a rate of 1.926 percent, rather than the rate of 3.852 percent which most other utility companies pay.

Purpose: To be consistent with court interpretations of the Federal Railroad Revitalization and Regulatory Reform Act (the 4-R Act).

Category/Year Enacted: Commerce; 1977.

Primary Beneficiaries: Approximately 8 firms report under this classification.

Conflict With Other Programs: None evident.

Tax Savings ($000): FY 2000 FY 2001 FY 2002 FY 2003
   
State taxes 3,519 3,704 3,900 4,105
Local taxes - - - - - - - -

If the preferential rate were repealed, would the estimated revenue be realized? Yes, assuming it were allowable by the Courts.

82.16.020(1f) OTHER PUBLIC SERVICE BUSINESS

Description: Companies that operate vessels over 65 feet, such as tugs and barges, and all public or privately owned public service companies not elsewhere classified, are subject to public utility tax at a rate of 1.926 percent rather than the 3.852 percent rate which most other utility operations pay.

Purpose: The purposes presumably include encouraging warehouse location and development (until 1986 most warehousing was subject to public utility tax), commerce, development of ports and coastal transportation.

Category/Year Enacted: Economic development; 1935.

Primary Beneficiaries: Approximately 240 firms report under this classification.

Conflict With Other Programs: None evident.

Tax Savings ($000): FY 2000 FY 2001 FY 2002 FY 2003
   
State taxes 3,514 3,820 4,152 4,513
Local taxes - - - - - - - -

If the preferential rate were repealed, would the estimated revenue be realized?

Yes; although doubling of the tax rate might drive some firms out of business.