House of Representatives

HB 2576

sales tax exemption; utilities

Sponsors: Kraft, Polstra, Brimhall, et al

DP	Committee on Energy Utilities and Technology
DPA	Committee on Ways and Means
DPA	Caucus and COW
x	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. The strike-everything amendment was further amended to set the rate at 4 1/2%, instead of eliminating the tax and exempts public institutions, municipalities and counties from the utility and telecommunications tax.

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 The current state transaction privilege tax rate is 5% and will increase to 5.6 per cent on June 1, 2001.

Provisions

· Sets a new state transaction privilege tax rate of 4½% (instead of 5%) for utility and telecommunications activities beginning January 1, 2002. This rate would be in addition to the .6% rate for education purposes which takes effect June 1, 2001 that was approved by voters at the November, 2000 general election.

· Exempts school districts, public schools, community colleges, state universities, cities, towns, counties and state agencies from paying the transaction privilege tax on utility or telecommunications (phone) bills.

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

HB 2576 proposed strike everything amendment was adopted in the Ways and Means Committee as listed in the provisions.

HB 2576 passed Committee of the Whole with the following amendments:

· Instead of the phase-out on utility and telecommunications transaction privilege tax, it sets a new rate of 4 ½% beginning January 1, 2002.

· Exempts school districts, public schools, community colleges, state universities, cities, towns, counties and state agencies from paying the transaction privilege tax on utility or telecommunications (phone) bills.

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· 45th Legislature

· First Regular Session 3 March 22, 2001

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