It is the intent of the legislature to reduce by half the burdensome 49.4 cent per gallon tax imposed on fuel. The legislature intends to supplant the loss of revenues with a more stable revenue source by using the retail sales tax paid on motor vehicles as the source of funding.
This section modifies existing section 82.38.030. Here is the modified chapter for context.
There is levied and imposed upon fuel licensees a tax at the rate of 19.7 cents per gallon of fuel.
Beginning July 1, 2003, an additional and cumulative tax rate of five cents per gallon of fuel is imposed on fuel licensees. This subsection (2) expires when the bonds issued for transportation 2003 projects are retired.
3.
Taxes are imposed when:
a. Fuel is removed in this state from a terminal if the fuel is removed at the rack unless the removal is by a licensed supplier or distributor for direct delivery to a destination outside of the state, or the removal is by a fuel supplier for direct delivery to an international fuel tax agreement licensee under RCW 82.38.320;
b. Fuel is removed in this state from a refinery if either of the following applies:
i. The removal is by bulk transfer and the refiner or the owner of the fuel immediately before the removal is not a licensed supplier; or
ii. The removal is at the refinery rack unless the removal is to a licensed supplier or distributor for direct delivery to a destination outside of the state, or the removal is to a licensed supplier for direct delivery to an international fuel tax agreement licensee under RCW 82.38.320;
c. Fuel enters into this state for sale, consumption, use, or storage, unless the fuel enters this state for direct delivery to an international fuel tax agreement licensee under RCW 82.38.320, if either of the following applies:
i. The entry is by bulk transfer and the importer is not a licensed supplier; or
ii. The entry is not by bulk transfer;
d. Fuel enters this state by means outside the bulk transfer-terminal system and is delivered directly to a licensed terminal unless the owner is a licensed distributor or supplier;
e. Fuel is sold or removed in this state to an unlicensed entity unless there was a prior taxable removal, entry, or sale of the fuel;
f. Blended fuel is removed or sold in this state by the blender of the fuel. The number of gallons of blended fuel subject to tax is the difference between the total number of gallons of blended fuel removed or sold and the number of gallons of previously taxed fuel used to produce the blended fuel;
g. Dyed special fuel is used on a highway, as authorized by the internal revenue code, unless the use is exempt from the fuel tax;
h. Dyed special fuel is held for sale, sold, used, or is intended to be used in violation of this chapter;
i. Special fuel purchased by an international fuel tax agreement licensee under RCW 82.38.320 is used on a highway; and
j. Fuel is sold by a licensed fuel supplier to a fuel distributor or fuel blender and the fuel is not removed from the bulk transfer-terminal system.
This section modifies existing section 82.08.020. Here is the modified chapter for context.
There is levied and collected a tax equal to 6.5 percent of the selling price on each retail sale in this state of:
Tangible personal property, unless the sale is specifically excluded from the RCW 82.04.050 definition of retail sale;
Digital goods, digital codes, and digital automated services, if the sale is included within the RCW 82.04.050 definition of retail sale;
Services, other than digital automated services, included within the RCW 82.04.050 definition of retail sale;
Extended warranties to consumers; and
Anything else, the sale of which is included within the RCW 82.04.050 definition of retail sale.
There is levied and collected an additional tax on each retail car rental, regardless of whether the vehicle is licensed in this state, equal to five and nine-tenths percent of the selling price. The revenue collected under this subsection must be deposited in the multimodal transportation account created in RCW 47.66.070.
[Empty]
Beginning July 1, 2003, there is levied and collected an additional tax of three-tenths of one percent of the selling price on each retail sale of a motor vehicle in this state, other than retail car rentals taxed under subsection (2) of this section. The revenue collected under this subsection must be deposited in the multimodal transportation account created in RCW 47.66.070.
For purposes of this subsection (3) , "motor vehicle" has the meaning provided in RCW 46.04.320, but does not include:
Farm tractors or farm vehicles as defined in RCW 46.04.180 and 46.04.181, unless the farm tractor or farm vehicle is for use in the production of marijuana;
Off-road vehicles as defined in RCW 46.04.365;
Nonhighway vehicles as defined in RCW 46.09.310; and
Snowmobiles as defined in RCW 46.04.546.
[Empty]
Beginning July 1, 2022, and every year thereafter, all revenue collected under subsection (1) of this section on each new and used retail sale of a vehicle in this state, including private party sales, but excluding retail car rentals taxed under subsection (2) of this section, must be deposited into the motor vehicle fund created in RCW 46.68.070.
For purposes of this subsection (4), "vehicle" has the meaning provided in RCW 46.04.670 and includes, but is not limited to, passenger vehicles, light trucks, commercial vehicles, travel trailers, recreational vehicles, intermittent use trailers, motorcycles, and campers. "Vehicle" does not include:
Farm tractors or farm vehicles as defined in RCW 46.04.180 and 46.04.181, unless the farm tractor or farm vehicle is for use in the production of cannabis;
Off-road vehicles as defined in RCW 46.04.365;
Nonhighway vehicles as defined in RCW 46.09.310;
Bicycles as defined in RCW 46.04.071; and
Snowmobiles as defined in RCW 46.04.546.
Beginning on December 8, 2005, 0.16 percent of the taxes collected under subsection (1) of this section must be dedicated to funding comprehensive performance audits required under RCW 43.09.470. The revenue identified in this subsection must be deposited in the performance audits of government account created in RCW 43.09.475.
The taxes imposed under this chapter apply to successive retail sales of the same property.
The rates provided in this section apply to taxes imposed under chapter 82.12 RCW as provided in RCW 82.12.020.
This section modifies existing section 82.12.020. Here is the modified chapter for context.
There is levied and collected from every person in this state a tax or excise for the privilege of using within this state as a consumer any:
Article of tangible personal property acquired by the user in any manner, including tangible personal property acquired at a casual or isolated sale, and including by-products used by the manufacturer thereof, except as otherwise provided in this chapter, irrespective of whether the article or similar articles are manufactured or are available for purchase within this state;
Prewritten computer software, regardless of the method of delivery, but excluding prewritten computer software that is either provided free of charge or is provided for temporary use in viewing information, or both;
Services defined as a retail sale in RCW 82.04.050 (2) (a) or (g) or (6)(c), excluding services defined as a retail sale in RCW 82.04.050(6)(c) that are provided free of charge;
Extended warranty; or
[Empty]
Digital good, digital code, or digital automated service, including the use of any services provided by a seller exclusively in connection with digital goods, digital codes, or digital automated services, whether or not a separate charge is made for such services.
With respect to the use of digital goods, digital automated services, and digital codes acquired by purchase, the tax imposed in this subsection (1)(e) applies in respect to:
(A) Sales in which the seller has granted the purchaser the right of permanent use;
(B) Sales in which the seller has granted the purchaser a right of use that is less than permanent;
(C) Sales in which the purchaser is not obligated to make continued payment as a condition of the sale; and
(D) Sales in which the purchaser is obligated to make continued payment as a condition of the sale.
iii. With respect to digital goods, digital automated services, and digital codes acquired other than by purchase, the tax imposed in this subsection (1)(e) applies regardless of whether or not the consumer has a right of permanent use or is obligated to make continued payment as a condition of use.
The provisions of this chapter do not apply in respect to the use of any article of tangible personal property, extended warranty, digital good, digital code, digital automated service, or service taxable under RCW 82.04.050 (2) (a) or (g) or (6)(c), if the sale to, or the use by, the present user or the present user's bailor or donor has already been subjected to the tax under chapter 82.08 RCW or this chapter and the tax has been paid by the present user or by the present user's bailor or donor.
[Empty]
Except as provided in this section, payment of the tax imposed by this chapter or chapter 82.08 RCW by one purchaser or user of tangible personal property, extended warranty, digital good, digital code, digital automated service, or other service does not have the effect of exempting any other purchaser or user of the same property, extended warranty, digital good, digital code, digital automated service, or other service from the taxes imposed by such chapters.
The tax imposed by this chapter does not apply:
If the sale to, or the use by, the present user or his or her bailor or donor has already been subjected to the tax under chapter 82.08 RCW or this chapter and the tax has been paid by the present user or by his or her bailor or donor;
In respect to the use of any article of tangible personal property acquired by bailment and the tax has once been paid based on reasonable rental as determined by RCW 82.12.060 measured by the value of the article at time of first use multiplied by the tax rate imposed by chapter 82.08 RCW or this chapter as of the time of first use;
In respect to the use of any article of tangible personal property acquired by bailment, if the property was acquired by a previous bailee from the same bailor for use in the same general activity and the original bailment was prior to June 9, 1961; or
To the use of digital goods or digital automated services, which were obtained through the use of a digital code, if the sale of the digital code to, or the use of the digital code by, the present user or the present user's bailor or donor has already been subjected to the tax under chapter 82.08 RCW or this chapter and the tax has been paid by the present user or by the present user's bailor or donor.
[Empty]
Except as provided in (b) of this subsection (4), the tax is levied and must be collected in an amount equal to the value of the article used, value of the digital good or digital code used, value of the extended warranty used, or value of the service used by the taxpayer, multiplied by the applicable rates in effect for the retail sales tax under RCW 82.08.020.
In the case of a seller required to collect use tax from the purchaser, the tax must be collected in an amount equal to the purchase price multiplied by the applicable rate in effect for the retail sales tax under RCW 82.08.020.
Beginning July 1, 2022, and every year thereafter, 100 percent of all use tax revenue collected under subsection (1) of this section on the use of each new and used vehicle in this state, but excluding retail car rentals taxed under RCW 82.08.020, must be deposited into the motor vehicle fund created in RCW 46.68.070.
For purposes of the tax imposed in this section, "person" includes anyone within the definition of "buyer," "purchaser," and "consumer" in RCW 82.08.010.
The department of revenue, in consultation with the office of the state treasurer and the office of financial management, shall provide recommendations, in the form of draft legislation, to resolve any unintended consequences caused by the changes under this act to the appropriate committees of the legislature by October 15, 2022.
This section expires October 15, 2023.