RETAIL SALES & USE TAXEXEMPTIONS: PUBLIC ACTIVITIES

82.04.050(7) FEDERAL/LOCAL ROAD CONSTRUCTION

Description: Labor and services (but not materials) performed on public roads and transportation facilities owned by the federal or local (but not the state) governments are exempt from retail sales tax.

Purpose: The state cannot tax the federal government, and the labor portion of public construction is considered the direct obligation of the purchasing governmental entity. In contrast, the materials incorporated into federal projects are taxable because the items are considered to be "used" by the installing contractor. Also the exemption reduces the cost of streets and roads constructed by local government.

Category/Year Enacted: Government; 1943.

Primary Beneficiaries: Federal and local governments.

Conflict With Other Programs: None evident.

Tax Savings ($000): FY 2000 FY 2001 FY 2002 FY 2003
State taxes 53,171 54,200 55,253 56,333
Local taxes 13,088 13,341 13,601 13,867
If the exemption were repealed, would the estimated revenue be realized? Yes; assuming the U.S. government undertakes very little road construction, much of the impact is associated with local road construction which could be taxed.

82.04.050(9) FEDERAL GOVERNMENT STRUCTURES

Description: Charges made for labor and services (not materials) in connection with building, repairing or improving new or existing structures for the federal government or local housing authorities, are exempt from the retail sales tax. Also exempt are charges for moving of earth and clearing land for the federal government and local housing authorities.

Purpose: The state cannot tax the federal government and the labor portion of construction charges is considered to be the direct obligation of the purchasing governmental entity. Charges for materials are taxable on the part of the installing contractor.

Category/Year Enacted: Government; 1975.

Primary Beneficiaries: The federal government and local housing authorities.

Conflict With Other Programs: None evident.

Tax Savings ($000): FY 2000 FY 2001 FY 2002 FY 2003
State taxes 9,795 9,991 10,190 10,394
Local taxes 2,562 2,613 2,665 2,718
If the exemption were repealed, would the estimated revenue be realized?

No; most of the impact represents federal construction which could not be taxed.

82.08.02525 COPIES OF PUBLIC RECORDS

82.12.02525

Description: Sales of public records by state and local agencies are exempt from sales/use tax, if the documents are copied under a request for a public record pursuant to Chapter 42.17 RCW. The exemption applies if no fee is charged for the record other than an amount to reimburse the agency for its actual costs of providing the record.

Purpose: Efficiency and economy of governmental operations.

Category/Year Enacted: Government; 1996.

Primary Beneficiaries: Washington residents and governmental agencies.

Conflict With Other Programs: None evident.

Tax Savings ($000): FY 2000 FY 2001 FY 2002 FY 2003
State taxes 76 76 76 76
Local taxes 20 20 20 20

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

82.08.0255(1b) FUEL USED IN URBAN TRANSIT

82.12.0256(3)

Description: Motor vehicle fuel purchased for the purpose of public transportation is exempt from retail sales/use tax.

Purpose: The purpose is apparently to encourage the use of public transportation.

Category/Year Enacted: Government; 1980.

Primary Beneficiaries: Public transportation systems and their customers.

Conflict With Other Programs: None evident.

Tax Savings ($000): FY 2000 FY 2001 FY 2002 FY 2003
State taxes 666 670 690 713
Local taxes 173 176 181 187

If the exemption were repealed, would the estimated revenue be realized? Yes; but presumably other local taxes or fares would have to be raised to provide the same level of transportation service.

82.08.0256 PUBLIC UTILITY PROPERTY

82.12.0257

Description: The sale of operating property of a public utility to the state or a local government jurisdiction for use in conducting utility business is exempt from sales/use tax.

Purpose: This exemption recognizes that there may be changes in public entities that provide utility services through annexations or incorporations, and that equipment will be transferred upon which sales tax was previously paid. It avoids any double taxation resulting from such reorganizations.

Category/Year Enacted: Government; 1935.

Primary Beneficiaries: State and local jurisdictions, public utilities, water districts, etc.

Conflict With Other Programs: Yes. The state and local governments are subject to sales and use tax on most other purchases.

Tax Savings ($000): Minimal; there are few such sales involving tangible personal property.

82.08.02569 GRAVITATIONAL WAVE OBSERVATORY

82.12.02569

Description: Sales and use tax exemptions are provided for tangible personal property that is incorporated into a structure which is an integral part of a laser interferometer gravitational wave observatory. Construction of buildings and vacuum systems has been completed at the LIGO observatory facility at the Hanford Reservation.

Purpose: The purpose of the project is to confirm the existence of gravitational waves and study them in order to learn more about the universe. The tax exemption relieves the contractor, the California Institute of Technology, from sales tax liability on the materials.

Category/Year Enacted: Government; 1996.

Primary Beneficiaries: California Institute of Technology and the federal government.

Conflict With Other Programs: None evident.

Tax Savings ($000): Due to confidentiality requirements, the impact of this exemption cannot be publicly stated because it is believed to affect fewer than three taxpayers.

82.08.0271 WATERSHED AND FLOOD PROTECTION

Description: State and local governmental entities are exempt from sales tax on tangible personal property consumed and for labor and services rendered for watershed and/or flood prevention projects. The exemption is limited to that portion of the selling price that is reimbursable by the federal government under the watershed protection and flood prevention act.

Purpose: The purpose is to assure that the sales tax does not apply to the federal government, specifically the federal funds used for flood control programs.

Category/Year Enacted: Government; 1963.

Primary Beneficiaries: State and local governmental entities.

Conflict With Other Programs: None evident.

Tax Savings ($000): None; no situations have been found where this exemption is applicable.

82.08.0275 SAND/GRAVEL FOR CITY & COUNTY ROADS

82.12.0269

Description: The cost of labor and services performed in mining, sorting, and crushing of sand and gravel taken from a pit that is owned by or leased to a city or county is exempt from sales/use 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 apparent purpose is to exclude from tax government operations and to assist local road construction. It also recognizes the difficulty encountered in valuing the sand and gravel.

Category/Year Enacted: Government; 1965.

Primary Beneficiaries: County and city governments and their road contractors.

Conflict With Other Programs: None evident.

Tax Savings ($000): FY 2000 FY 2001 FY 2002 FY 2003
State taxes 1,089 1,100 1,111 1,122
Local taxes 288 291 294 297

If the exemption were repealed, would the estimated revenue be realized? Yes, but presumably other local taxes would have to be raised to provide the same level of local road construction.

82.08.0278 SALES RELATED TO ANNEXATION

82.12.0274

Description: Personal property that is sold from one governmental entity to another as a result of annexation or incorporation is exempt from sales/use taxes.

Purpose: The exemption was enacted in support of local government.

Category/Year Enacted: Government; 1970.

Primary Beneficiaries: Cities and counties.

Conflict With Other Programs: None evident.

Tax Savings ($000): Minimal; although there have been many annexations and incorporations in recent years, transfers of personal property among jurisdictions are very infrequent.

82.08.0285 FERRY BOATS

82.12.0279

Description: Construction and repair of ferry boats for the state of Washington or local governments are exempt from sales/use tax.<

Purpose: The purpose is evidently to support construction of these vessels and to minimize the cost to government.

Category/Year Enacted: Government; 1977.

Primary Beneficiaries: State and local governments.

Conflict With Other Programs: Yes. The state and local governments are subject to sales/use taxes on most other purchases.

Tax Savings ($000): FY 2000 FY 2001 FY 2002 FY 2003
State taxes 4,899 3,324 4,007 4,007
Local taxes 1,281 869 1,048 1,048

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

Yes; but presumably other taxes would have to be raised to provide the same level of ferry service.

82.08.0287 RIDE-SHARING VEHICLES

82.12.0282

Description: Five passenger motor vehicles meeting the requirements as ride-sharing vehicles are exempt from sales/use tax if they are exempt from motor vehicle excise tax under RCW 82.44.015. (NOTE: The MVET exemption was effectively repealed, effective January 1, 2000, by Initiative 695; therefore the sales/use tax exemption is no longer applicable.)

Purpose: To encourage ride sharing for fuel conservation purposes and to assist in addressing the requirements of the Commute Trip Reduction Act, the Growth Management Act, the Americans with Disabilities Act and the Clean Air Act by promoting ride-sharing.

Category/Year Enacted: Other; 1980 (vehicle size reduced to 5 passengers in 1993).

Primary Beneficiaries: Businesses at affected work sites, transit districts, social service providers, the riders and operators of about 3,100 ride-sharing vehicles, and, indirectly, all highway users.

Conflict With Other Programs: None evident.

Tax Savings ($000): None, due to the repeal of RCW 82.44.015 by Initiative 695.

82.08.02875 PARKING AT PROFESSIONAL FOOTBALL STADIUM

Description: Retail sales tax does not apply to charges for parking at parking facilities owned by the Public Stadium Authority in conjunction with the professional football stadium and exhibition center.

Purpose: The Public Stadium Authority is expected to impose a tax on parking at these facilities in order to finance construction and operation of the stadium and exhibition center. It was felt that the new tax, in addition to the retail sales tax, would be too onerous for parking customers.

Category/Year Enacted: Government; 1997.

Primary Beneficiaries: The Public Stadium Authority and users of the stadium and exhibition center parking lots.

Conflict With Other Programs: None evident.

Tax Savings ($000): FY 2000 FY 2001 FY 2002 FY 2003
State taxes - - - - - - 20
Local taxes - - - - - - 1

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

82.08.02915 HOUSING FOR YOUTH IN CRISIS

82.12.02915

Description: An exemption from retail sales and use tax is provided for nonprofit health or social welfare organizations for the cost of materials devoted to construction of alternative housing facilities for youth who are "in crisis." The facility must be licensed under RCW 74.15. The exemption does not extend to charges for labor associated with the construction.

Purpose: To encourage the construction of shelters for youth who have left home.

Category/Year Enacted: Nonprofit health or social welfare; 1995. Previous July 1, 1999 expiration date repealed in 1998.

Primary Beneficiaries: Nonprofit organizations that build youth shelters.

Conflict With Other Programs: None evident.

Tax Savings ($000): FY 2000 FY 2001 FY 2002 FY 2003
State taxes 94 105 107 109
Local taxes 24 27 27 28

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

82.08.0299 LODGING FOR THE HOMELESS

Description: Exemption from sales tax is allowed for emergency lodging that is provided to homeless persons for a period of up to 30 days under a shelter voucher program that is administered by a local government agency or a private organization that provides emergency food and shelter.

Purpose: To assist housing services for the homeless.

Category/Year Enacted: Nonprofit - health or social welfare; 1988.

Primary Beneficiaries: Homeless persons who receive temporary lodging at hotels, motels and other facilities which would otherwise collect retail sales tax.

Conflict With Other Programs: None evident.

Tax Savings ($000): FY 2000 FY 2001 FY 2002 FY 2003
State taxes* 6 6 6 6
Local taxes** 5 5 5 5

*4.5 percent rate, net of local hotel/motel tax, plus state convention center tax in King County.

**Includes local sales/use and hotel/motel taxes.

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

82.12.02545 NAVAL AIRCRAFT TRAINING EQUIPMENT

Description: Use tax exemption is provided for military aircraft training equipment that is transferred to Washington State as a result of the Federal Base Closure Act (P.L. 101-510). The use tax exemption is restricted to equipment transfers related to this federal statute, and all such transfers have now taken place. Thus, no future utilization of this exemption is possible.

Purpose: The purpose was to encourage the installation of flight training equipment at bases in this state and allow flight training to continue here, thus retaining jobs.

Category/Year Enacted: Government; 1995.

Primary Beneficiaries: Whidbey Island Naval Air Station.

Conflict With Other Programs: Other federally owned personal property is subject to use tax when brought into the state.

Tax Savings ($000): None. The exemption was applicable during fiscal year 1997.

82.12.02595 DONATIONS TO NONPROFITS & GOVERNMENT

Description: Nonprofit charitable organizations and state and local governments are exempted from use tax liability on any tangible personal property donated to them.

Purpose: To enable nonprofit groups and government jurisdictions to accept donated items without use tax liability.

Category/Year Enacted: Nonprofit - other; 1995.

Primary Beneficiaries: Nonprofit groups and governmental entities that receive donated items.

Conflict With Other Programs: None evident.

Tax Savings ($000): FY 2000 FY 2001 FY 2002 FY 2003
State taxes 123 129 136 143
Local taxes 32 34 35 37

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

Yes; although previously the use tax liability was typically only discovered via audit.

82.12.0264 DRIVER-TRAINING VEHICLES

Description: Dual-control driver-training vehicles which are loaned to and used exclusively by public and private schools (but not commercial driver training schools) are exempt from use tax.

Purpose: The purpose is to support driver training programs and eliminate the potential use tax liability for such vehicles that may be donated to schools.

Category/Year Enacted: Government; 1955.

Primary Beneficiaries: Public and private schools with driver-training programs.

Conflict With Other Programs: Yes. Public and private schools are subject to sales/use tax on most other items (except donated computers).

Tax Savings ($000): FY 2000 FY 2001 FY 2002 FY 2003
State taxes 98 101 104 107
Local taxes 26 26 27 28

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

Yes; however, some dealers might elect not to loan vehicles if they would incur use tax liability.

82.12.0284 COMPUTERS GIVEN TO SCHOOLS

Description: Use tax exemption is provided for schools that receive donated computers from individuals and businesses. (NOTE: An exemption adopted in 1995 exempts all tangible personal property that is donated to a nonprofit organization, including private schools, or to a governmental entity, including public schools, RCW 82.12.02595.)

Purpose: The purpose is evidently to encourage the donation of computer equipment to public or private nonprofit schools or colleges by providing a use tax exemption for the donor and the school and to promote computer literacy for students.

Category/Year Enacted: Government; 1983.

Primary Beneficiaries: Public and private schools.

Conflict With Other Programs: None evident.

Tax Savings ($000): FY 2000 FY 2001 FY 2002 FY 2003
State taxes 13 13 13 13
Local taxes 4 4 4 4

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

Yes, although such donations might decrease if the school were liable for use tax.