Washington Business Fall 2015 | Legislative Review | Page 39

issue area reports | taxation

TAX INCENTIVES THAT EXPIRE IN 2015

EXPIRATION

High Technology R&D (Sales and Use Tax)

Jan. 1, 2015

High Technology R&D (B&O Tax)

Jan. 1, 2015

Bonneville Power Administration Program (B&O Tax)

June 30, 2015

Forest Derived Biomass (B&O Tax)

June 30, 2015

Biodiesel and E85 Fuel Sales (B&O Tax)

July 1, 2015

Biodiesel and E85 Fuel Distribution (Sales and Use Tax)

July 1, 2015

Truck Auxiliary Power — Batteries and Infrastructure (Sales and Use Tax)

July 1, 2015

Truck Auxiliary Power — Enabling Parked Operation (Sales and Use Tax)

July 1, 2015

Bad Debts (Fuel Tax)

July 1, 2015

Biodiesel and Alcohol Fuel Production Facilities (Leasehold Excise Tax)

Dec. 31, 2015

Biodiesel and Alcohol Fuel Production Facilities (Property Tax)

Dec. 31, 2015

Wood Biomass Fuel Production Facilities (Leasehold Excise Tax)

Dec. 31, 2015

Wood Biomass Fuel Production Facilities (Property Tax)

Dec. 31, 2015

Components of SB 6057
1. Extends the expiration date of tax
preferences for food processors.
2. Provides a sales and use tax
exemption for eligible server
equipment in certain data centers.
3. Creating a pilot program that
provides a sales and use tax
deferral on the construction of
manufacturing facilities.
4. Extends tax preferences for
aluminum smelters.
5. Extends the preferential business and
occupation tax rate for newspapers.
6. Provides reduced public utility tax
rate for log transportation businesses.
7. Provides a use tax exemption to
nonresident entity owned vessels.
8. Modifies the distribution of
aircraft excise taxes.
9. Provides a business and occupation tax
credit for businesses that hire veterans.
10. Permanently extends tax preferences
to honey bee products.
11. Permanently extends a sales and
use tax exemption for wax, ceramic
materials, and labor related to the

Bill considered as part of
AWB’s voting record

creation of investment castings used
in industrial applications.
12. Provides business and occupation
tax exemption for hazardous
substances warehoused but not
otherwise used in the state.
13. Modifies a property tax exemption
for property owned by nonprofit fair
associations.
14. Changes the administration of
unclaimed property laws.
15. Removes the expiration date for the
sales and use tax exemption for wax
and ceramic materials.
The extension of these tax incentives were
subject to great political debate as lawmakers finalized their budget agreement.
While these incentives were enacted, thirteen were allowed to expire.

budget, while the House relied on $1.5 billion in new and higher taxes to balance their
budget. The final budget deal included tax
increases totaling $200 million. There were
five parts to the tax bill:
• Increases the business and occupation
tax on royalties to 1.5 percent;
• Establishes click-through nexus;
• Adds wholesaling to the economic
nexus definition;
• Removes the machinery and equipment
tax exemption for certain computer
software manufacturers with more
than 40,000 employees; and
• Increases late penalties for excise taxes
by 4 percent.
AWB testified in opposition to these taxes
at various points during the session. The
tax increase on royalties will triple the business and occupation taxes paid by these
companies which is a significant increase
for any taxpayer. Adding wholesaling to the
economic nexus standard puts Washington
further out of step with the rest of the nation
that uses a physical presence standard. The
increase to late paid taxes will exacerbate
the problems facing small businesses when
faced with a tax bill they feel is incorrect or
when faced with other economic difficulties. Finally, when lawmakers tinker with the
highly successful manufacturing sales and
use tax exemption we are concerned about
how those changes will hurt our competitiveness. The Senate passed the bill by a vote
of 35-10 and the House 60-38.

additional information

SB 6138

State map of tobacco taxes and
smuggling rates:
http://bit.ly/cigarettetax

Passed/AWB Opposed

Budget details:
http://bit.ly/budgetdetails

tax increases

Throughout the regular and second special
session, the Senate Republican majority
refused to include tax increases in their

Favorable outcome for
Washington businesses

List of tax bills introduced:
http://bit.ly/2015taxbills

Missed Opportunities

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