VEHICLE EXCISE TAXES

NOTE: On November 2, 1999 the voters approved Initiative 695 which changes the motor vehicle excise tax from a tax of 2.2 percent of current market value to a flat fee of $30, effective January 1, 2000. As part of the initiative, the following previous exemptions were repealed:

82.44.010(1) Government vehicles

82.44.010(5) Nonresident military personnel

82.44.015 Ride-sharing vehicles

82.44.020(4) Truck trailers

82.44.022 $30 credit for personal vehicles

82.44.023 Rental cars

82.44.025 Taipei economic/cultural vehicles

82.50.520(3) Unlicensed campers/travel trailers

82.48.100 GOVERNMENT AIRCRAFT

Description: Aircraft owned by governmental entities are exempt from aircraft excise tax.

Purpose: The exemption represents legislative policy not to tax government property and the constitutional prohibition from taxing the federal government.

Category/Year Enacted: Government; 1949.

Primary Beneficiaries: Federal, state and local governments, including community colleges, which own approximately 85 planes.

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 - - - - - - - -

*Estimates exclude military aircraft.

If the exemption were repealed, would the estimated revenue be realized? No; federal and state constitutions prohibit taxation of federal property, and state policy is not to tax state/local property.

82.48.100 COMMERCIAL & EXPERIMENTAL AIRCRAFT

Description: Commercial aircraft engaged in interstate or foreign commerce and aircraft used for purposes of testing or training of crews are exempt from the aircraft excise tax.

Purpose: The exemption reflects the federal restriction against taxing interstate commerce. It also encourages the development of experimental aircraft and supports the use of aircraft used for training by aircraft manufacturers and sellers.

Category/Year Enacted: Commerce; 1949.

Primary Beneficiaries: Airline companies and aircraft manufacturers.

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 - - - - - - - -

If the exemption were repealed, would the estimated revenue be realized? No; the federal constitution prohibits taxation of interstate commerce. Revenues from taxation of experimental and training aircraft would be minimal.

82.48.100 AIRCRAFT HELD FOR SALE

Description: Aircraft which are held for sale, exchange, delivery, etc., or demonstration purposes solely as stock in trade by a licensed aircraft dealer are exempt from the aircraft excise tax.

Purpose: The exemption is justified on grounds of equity since business inventories are exempt from personal property tax.

Category/Year Enacted: Economic development; 1955.

Primary Beneficiaries: Aircraft dealers.

Conflict With Other Programs: None evident.

Tax Savings ($000): FY 2000 FY 2001 FY 2002 FY 2003
State taxes 3 3 3 3
Local taxes - - - - - - - -

If the exemption were repealed, would the estimated revenue be realized? Only if the property tax exemption for inventories were also repealed.

82.48.100 NONRESIDENT AIRCRAFT, PULLMAN AIRPORT

Description: Exemption is provided from the aircraft excise tax for aircraft owned by nonresidents, if the plane is located at an airport which is jointly owned by governmental entities of Washington and another state.

Purpos: To protect such owners from double taxation in both states. Also, it provides an economic incentive for Idaho residents to base their planes at the Moscow-Pullman airport in Whitman County.

Category/Year Enacted: Economic development; 1999.

Primary Beneficiaries: Airplanes based at the Moscow-Pullman airport which are owned by nonresidents.

Conflict With Other Programs: None evident.

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

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

82.49.020 BOATS UNDER 16 FEET

Description: The following vessels are exempt from the 0.5 percent state watercraft excise tax: military or other boats of the federal government; state and local government vessels; boats with less than 10 horsepower motors; boats under 16 feet in length with no motor; all human powered boats; vessels temporarily located in the state for repair and documented vessels that are primarily engaged in interstate commerce.

Purpose: The purpose of these exemptions s not to tax government property and to recognize the inability of the state to tax interstate commerce. The exemption of small and human powered boats is intended to minimize administration costs.

Category/Year Enacted: Individuals, government and commerce; 1983.

Primary Beneficiaries: Small boat owners.

Conflict With Other Programs: None evident.

Tax Savings ($000):* FY 2000 FY 2001 FY 2002 FY 2003
State taxes 1,350 1,390 1,430 1,475
Local taxes - - - - - - - -

*Estimate includes only boats under 16 feet and human powered boats.

If the exemption were repealed, would the estimated revenue be realized? Theoretically; but administrative costs could be high.