Washington Business Fall 2016 | Legislative Review

2016 legislative review survey and report are burdensome, overly complicated, and of questionable value. HB 2879 received a hearing from the House Finance Committee, but ran out of time before it could progress. Consolidating and simplifying the annual survey and report will continue to be a priority for AWB. SSHB 2839/SB 6454 airplane repair tax Passed/AWB Supported With the goal of attracting economic activity and job creation in Washington, Re p. L a r r y S p r i n g e r, D - K i r k l a n d , sponsored Second Substitute House Bill 2839. Washington is competing with other Pacific Northwest states to attract aircraft repair service centers. This bill creates an exemption from sales and use tax, in the form of a remittance, for all charges for construction of a new building that will be owned or leased by an aircraft maintenance repair operator. The tax incentives in Second Substitute House Bill 2839 allows Washington to successfully compete with other states for the high-wage jobs created by these companies, which have salaries between $75,000 and $120,000 a year. SHB 2938 trade convention taxes/ nexus Passed/AWB Supported Rep. Ed Orcutt, R-Kalama, successfully pushed Substitute House Bill 2938, a bill that encourages trade conventions in Washington state by modifying tax provisions related to them. Specifically, the bill allows an out-of-state business to participate in one trade convention in Washington each year without the participation being used as the sole basis to establish nexus for tax purposes. Conventions generate millions of dollars for communities and the state, and this bill secures Washington as a place that welcomes conventions and the economic and fiscal benefits that flow from them. 34 association of washington business SHB 2539 improve the lives of its citizens. Sponsored Passed/AWB Supported arose out of meetings with the governor to reet tax inheritance Rep. Terry Nealey, R-Dayton, sponsored, and AWB supported, Substitute House Bill 2539 concerning the inheritance exemption for the real estate excise tax. The goal of the bill is to resolve a misinterpretation related to how certain types of property transfers are documented. The conditions required to qualify for the inheritance exemption were clarified to include circumstances where a person is legally entitled to property as a result of a will or inheritance. The passage of this bill will result in a more accurate application of the real estate excise tax. SHB 2539 received unanimous support in the House and Senate. HB 2809/SB 6355 research and development tax credit Failed/AWB Supported Washington state is currently at a competitive disadvantage for being one of just several states without research and development (R&D) tax incentives. R&D tax credits are an important tool for helping attract, retain, and grow hightech companies and jobs in our state. The incentives were established in 1994, renewed in 2004, and existed until they were allowed to expire on Jan. 1, 2015. House Bill 2809 and Senate Bill 6355 would have reinstated the R&D incentives on a limited basis for biotechnology, medical device, or environmental technology related R&D. Both bills had bipartisan support in their respective chambers, but failed to pass out of their fiscal committees. Expect this issue to return in 2017. SHB 2977 targeted tax relief for silicon smelters by Rep. Shelly Short, R-Addy, SHB 2977 identify ways to recruit companies able to create jobs in our most rural, economically depressed communities. Washington’s economic recovery has largely been a Puget Sound recovery. There are many parts of the state outside of the Puget Sound where unemployment remains a significant problem. This bill would have encouraged job creation in rural Washington by providing competitive tax incentives. Manufacturing companies can become the cornerstone industries in local economies, creating opportunities for living-wage jobs. At a time when we are concerned about the growing wage gap in this state and in the nation, these types of jobs are a solution. SHB 2977 passed out of the House Finance Committee with broad support, but failed to move in the House Appropriations Committee. AWB looks forward to supporting this bill again in 2017. SHB 2334/SB 6184 taxation of martial arts Failed/AWB Supported Rep. Cindy Ryu, D-Shoreline, via Substitute House Bill 2334, attempted to fix an overly broad definition of “retail sale” created by legislation passed during the 2015 legislative session. The 2015 measure excluded certain forms of martial arts, but failed to provide a complete list of the various disciplines. SHB 2334 would have fixed this problem by fine-tuning the definition of martial arts and removing martial arts classes, training and events from the definition of “retail sale” except in very limited circumstances. Under SHB 2334, fees to participate in martial arts held at a stand-alone martial arts facility or most Failed/AWB Supported other venues would not be subject to retail Substitute House Bill 2977 is a great example of how targeted tax incentives can enhance Washington’s communities and sales tax, but would be subject to business and occupation tax under the Service and Other Business Activities classification.

Washington Business Fall 2016 | Legislative Review | Page 36