House of Representatives

HB 2576

sales tax exemption; utilities

Sponsors: Kraft, Polstra, Brimhall, et al

DP	Committee on Energy Utilities and Technology
x	Committee on Ways and Means
	Caucus and COW
	As Passed the House

Establishes a tax base exemption for revenues generated by companies that provide utility and telecommunication services to certain customers. The proposed strike-everything amendment eliminates the state transaction privilege (sales) tax on the utility and telecommunication classifications.

History

The utilities classification is comprised of businesses engaged in producing and furnishing or furnishing natural gas, water and electric services. The tax base for the utilities classification consists of the gross proceeds of sales or gross income derived from sales by business engaged in producing or providing natural gas, water or electricity.

The telecommunications classification is comprised of business that provide intrastate telecommunication services. The tax base for the telecommunications classification is the gross proceeds of sales or gross income derived from sales derived from tolls, subscriptions and services on behalf of subscribers or from the publication of a telephone directory.

Current law allows for deductions from gross revenues or gross income from both the telecommunication and utility tax bases. HB 2576 would expand the number of revenue sources eligible for deduction from the tax base for utility and telecommunication classifications. Thus gross income or gross revenues generated from sales to qualifying senior citizens would be deducted from the tax base. The current state corporate tax rate stands at 5.6 per cent.

Provisions

· Allows a utility to deduct from its tax base, revenues from sales of utility services to households that meet the following criteria:

· All the members of the household are at least sixty-five years of age.

· One member of the household must have resided at the same address for seven years and have reached the age of seventy-two.

· The total household income must not exceed thirty-five thousand year 2001 dollars.

· No member of the household owns or has interest in any other property.

· Allows a telecommunications company to deduct from its tax base, revenues from sales of intrastate telecommunication services to households that meet the following criteria:

· All the members of the household are at least sixty-five years of age.

· One member of the household must have resided at the same address for seven years and have reached the age of seventy-two.

· The total household income must not exceed thirty-five thousand year 2001 dollars.

· No member of the household owns or has interest in any other property.

· Defines Intrastate Telecommunications services as: transmitting signs, signals, writings, images, sounds, messages, data or other information of any nature by wire, radio waves, light waves or other electromagnetic means if the information transmitted originates and terminates in this state.

HB 2576 passed the Committee on Energy Utilities and Technology unamended.

Provision for the proposed strike-everything amendment

· Provides for the phase-out of the transaction privilege tax on businesses that engaged in the utility or telecommunications classification activities.

· Reduces the current state rate from 5% to zero as follows:

§ 2001 – 5%

§ 2002 – 4 ½%

§ 2003 – 4%

§ 2004 – 3 ½%

§ 2005 – 3%

§ 2006 – 2 ½%

§ 2007 – 2%

§ 2008 – 1 ½%

§ 2009 – 1%

§ 2010 – ½%

§ 2011 and thereafter - zero

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§ 45th Legislature

§ First Regular Session 2 February 26, 2001

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