DESCRIPTIONS of ITEMS for SALES AND USE TAX RECOVERY

The initiative proposes to eliminate 27 sales tax special-interest exemptions and  add collection of sales taxes on 10 services.  The amounts listed below are the estimates, provided by the state government of the revenue currently lost to the state, associated with these provisions.  These amounts are based upon the current 6% sales tax.  The calculation of the general revenue that would recovered at 5% ($287 million) is provided on page 6.    


DELETIONS from USE TAXES EXEMPTIONS

Estimated FY2017 amounts from General Fund Revenue Book, for FY2016, State of Idaho and amount listed in the Fiscal Note for the 2015 amendments to Idaho Code 63-3616

Idaho Code 63-3622:

2.1.03      Irrigation Equipment and Supplies $    4,435,000

Exempts agricultural irrigation equipment and supplies, even if attached to real property, and even if purchased by a contractor for an agricultural irrigation project.  Originally enacted in 1975.

(pg. 85 General Fund Revenue Book, FY 2016)

2.1.04      Pollution Control Equipment $  13,016,000

Exempts equipment required by regulatory agencies for air or water pollution controls, certain dry-cleaning equipment, liners and reagents for water quality standards, personal property primarily used to meet air or water quality standards that becomes a component, fixture or improvement to real property.  Originally enacted in 1977.  (pg. 85, General Fund Revenue Book, FY 2016)

2.1.05              Broadcast Equipment and Supplies $    3,066,000

Exempts equipment and supplies used to produce and broadcast radio and television programs.

Originally enacted in 1975.  (pg. 85, General Fund Revenue Book, FY 2016)

2.1.06              Publishing Equipment and Supplies $       197,000

Exempts equipment and supplies used to publish advertising type newspapers that are sold or given away to the public, as long as the paper contains at least 10% editorial comment and advertising revenue is the publisher’s primary source of income.  Originally enacted in 1979.

(pg. 85, General Fund Revenue Book, FY 2016)

2.1.08             Railroad Rolling Stock and Remanufacturing$    2,550,000

Exempts railroad rolling stock and for parts, equipment, and supplies used in the process of remanufacturing railroad rolling stock, whether or not the rolling stock is for resale.  Rolling stock must have been used in interstate commerce at least three months prior to rebuild to qualify.

Enacted in 1986.  (pg. 85, General Fund Revenue Book, FY 2016)

2.1.09 Interstate Trucks $    8,566,000

Exempts trucks weighing over 26,000 pounds when registered in the international registration plan, as well as their trailers, when miles accumulated by the fleet outside of Idaho are minimally 10% of the total fleet miles in any annual registration period.  Failure to meet the mileage requirement in any annual registration period invalidates the exemption and results in a tax liability based on the fair market value of the value of the vehicles at the end of the nonconforming period.  Enacted in 1989.

(pgs. 85-86, General Fund Revenue Book, FY 2016)

2.1.10 Out-of-State Contracts $    5,110,000

Exempts goods purchased by contractors to install into real property in non-taxing states

Enacted in 1965.  (pg. 86, General Fund Revenue Book, FY 2016)

2.1.24 Research and Development Equipment $    7,200,000

Exempts tangible personal property used in research and development activities.

Enacted in 2005.  (pg. 88, General Fund Revenue Book, FY 2016)

2.1.27 Glider Kit Vehicles $       376,000

Glider kit vehicles as defined in Idaho Code 49-123(f)   Enacted in 2006.

(pg. 88, General Fund Revenue Book, FY 2016)

Idaho Code 63-3621:

2.1.32 Beverage and Food Samples $         17,000

Exempts beverages including wine and beer, and food if given as a free tasting to a potential customer.  Enacted in 2012.  (pg. 89, General Fund Revenue Book, FY 2016)

DELETIONS from GOODS EXEMPTIONS

Idaho Code 63-3622:

2.2.07 Funeral Caskets $   1,623,000

Exempts goods sold in conjunction with a funeral.  Enacted in 1977. 

(pg. 90, General Fund Revenue Book, FY 2016)

2.2.11 Precious Metal Bullion $      558,000

Exempts sales of precious metal bullion and coins.  Enacted in 1982.

(pg. 91, General Fund Revenue Book, FY 2016)

2.2.12 Idaho Commemorative Silver Medallions$          2,000

Exempts sales of Idaho commemorative silver medallions.  Enacted in 2003.

(pg. 91, General Fund Revenue Book, FY 2016)

Idaho Code 63-3613:

2.2.13 New Manufactured/Modular Buildings $   2,597,000    

Excludes 45% of the sales price of new manufactured homes and modular buildings from the taxable sales price.  Enacted in 1965 at 60%, amended in 1976 to 45%.  

(pg. 91, General Fund Revenue Book, FY 2016)

Idaho Code 63-3613; 63-3621:

2.2.14 Telecommunications Equipment $   2,745,000

Exempts amount of discount or price reduction that is offered as an inducement to commence or continue telecommunications service.  Enacted in 1996. (pg. 91, General Fund Revenue Book, FY 2016)

Idaho Code 63-3622:

2.2.15 Personal Property Tax on Rentals $      400,000

Exempts the amount of property tax included in a rent payment for tangible personal property.  To be eligible, the property must initially be leased for at least a year.  Enacted in 2008.  

(pg. 91, General Fund Revenue Book, FY 2016)

Idaho Code 63-3616:

2.2.16 Remotely Accessed Digital Media $   8,487,500

Exempts certain computer software and other digital media defined as not tangible personal property by statute.  Enacted in 2014, amended in 2015 to expand media exempted.  (pg. 91, General Fund Revenue Book, FY 2016 plus amount listed in Fiscal Note from 2015 amendment)

DELETIONS from SERVICES EXEMPTIONS

Idaho Code 63-3609:

2.3.01 Construction (45%) $ 69,582,000

Sales tax is paid on the cost of materials used in construction projects, but the labor component

Is generally not taxed which is presumed to be 45%.  Mobile and manufactured homes are taxed at 55% of the sales price to give then equivalent treatment. (pg. 92, General Fund Revenue Book, FY 2016)

Idaho Code 63-3613:

2.3.05 Repairs $ 48,222,000

Exempts labor charges associated with repairing or installing tangible personal property as long as they are separately stated on the bill.  NAICS labor major group 811 is included in this category.  Enacted in 1965.  (pg. 92, General Fund Revenue Book, FY 2016)

 2.3.06 Professional Services $264,402,000

Exempts NAICS major labor group 541 including legal, accounting, engineering, architectural, consulting, scientific research and advertising services.  Enacted in 1965. (pg. 93, General Fund Revenue Book, FY 2016)

2.3.07 Business Services $133,131,000

Exempts office services, employment services, building services, employment agencies, facility services and security agencies.  NAICS labor major groups 561 and 562 are in this category.  Enacted in 1965.

(pg. 93, General Fund Revenue Book, FY 2016)

2.3.08 Personal Services $  11,536,000

Exempts laundry and dry cleaning, barbers and beauticians, shoe repair, funeral services, massage parlors and escort services.  NAICS major labor group 812 is this category.  Enacted in 1965.

(pg. 93, General Fund Revenue Book, FY 2016)

Idaho Code 67-7439:

2.3.12 Lottery Tickets and Pari-Mutuel Betting $  12,267,000

Exempts the sale and purchase of lottery tickets and pari-mutuel betting.  Also exempts any equipment used in lottery operations.  Enacted in 1988.  (pg. 93, General Fund Revenue Book, FY 2016)

Idaho Code 63-3622:

2.3.13 Media Measurement Services $          77,000

Exempts sale and purchase of any television, radio, newspaper or other media measurement service.

Enacted in 1997.  (pg. 94, General Fund Revenue Book, FY 2016)

2.3.14 Miscellaneous Services $    3,213,000

Exempts all personal service industries not classified elsewhere.  This includes pet care, photofinishing, parking lots and garages.  Enacted in 1965.  (pg. 94, General Fund Revenue Book, FY 2016)

2.3.15 Nonprofit Shooting Range Fees $         43,000

Exempts fees and memberships of nonprofit shooting and hunting organizations.  Enacted in 2006. 

(pg. 94, General Fund Revenue Book, FY 2016)

Idaho Code 63-3613:

2.3.16 Gratuities for Meals $       232,000

Exempts mandatory and voluntary gratuities for meals.  Enacted in 2011.

(pg. 94, General Fund Revenue Book, FY 2016)

DELETIONS from ENTITIES EXEMPTIONS

Idaho Code 63-3622:

2.4.02 Hospital Purchases $  31,338,000

Exempts purchases made by nonprofit hospitals licensed by the state for the care of ill persons BUT section excludes exemptions for purchases made by nursing homes or “similar institutions.”

Enacted in 1967.  (pg. 94, General Fund Revenue Book, FY 2016)

2.4.04 Canal Company Purchases $    1,080,000

Exempts purchases by canal companies defined as nonprofit corporations whose sole purpose is operating and maintaining dams, reservoirs, canals, lateral and drainage ditches, pumps and pumping plants.  Enacted in 1967. (pg. 95, General Fund Revenue Book, FY 2016)

2.4.11 INL Research and Development Purchases$    6,204,000

Exempts goods used for research and development at the Idaho National Laboratory.

Enacted in 1967.  (pg. 96, General Fund Revenue Book, FY 2016)

2.4.12 Motor Vehicles Purchased by Family Members$    2,397,000

Exempts sales of motor vehicles between family members related within the second degree of consanguinity. (pg. 96, General Fund Revenue Book, FY 2016)

2.4.13 Sales by 4-H and FFA Clubs at Fairs $         28,000

Exempts sales of animals by any 4-H club or FFA club held in conjunction with a fair or the Western Idaho Spring Lamb Sale.  Enacted in 1979. (pg. 96, General Fund Revenue Book, FY 2016)

Idaho Code 63-3613:

2.4.17 Sales by Outfitters and Guides $         16,000

Exempts outfitters from charging sales taxes on the federal fees connected to the use of recreational sites.  Enacted in 1990.  (pg. 97, General Fund Revenue Book, FY 2016)

2.4.18 Sales Through Vending Machines $    2,896,000

Allows retailers selling products through vending machines for $1.00 or less to pay tax on 117% of their acquisition cost of the products rather than on the retail sales price.  Enacted in 1977.

(pg. 97, General Fund Revenue Book, FY 2016)

2.4.19 Auto Manufacturer Rebates $        791,000

Allows dealers to deduct the amount of a rebate given to the buyer by the motor vehicle manufacturer, from the taxable sales price of the vehicle.  Enacted in 1990.  (pg. 97, General Fund Revenue Book, FY 2016)

Idaho Code 63-3622:

2.4.24 Volunteer Fire Departments/Emergency$        229,000

Exempts purchases made by volunteer fire departments and emergency medical service agencies. 

Enacted in 2002. (pg. 98, General Fund Revenue Book, FY 2016)

2.4.25 Senior Citizen Centers $          55,000

Exempts purchases made by senior citizen centers.  Enacted in 2002.

(pg. 98, General Fund Revenue Book, FY 2016)

VALUE OF DELETED EXEMPTIONS @ CURRENT 6% RATE $648,684,000

VALUE OF SALES AND USE TAX RECOVERY @ NEW 5% RATE$540,570,000

The projected sales tax revenue for FY 2016 is $1,517,275,700 at 6%

A reduction to 5% would reduce revenue by $253 million

BUT the BOTTOM LINE - The net change after deleting the above exemptions AND lowering the overall sales tax rate would be as follows:

           STATE REVENUE RECOVERED FOR ADDITIONAL FUNDING for 

           EDUCATION and other PUBLIC NEEDS = $287,000,000