Friday, March 12, 2010

Sin Taxes Revenue Estimated

The Washington Office of Financial Management has issued a forecast of the financial hit for various sin taxes as proposed during this legislative session.  HB 3204, titled AN ACT Relating to modifying Washington state excise tax laws, was introduced in the House of Representatives. The Office of Financial Management has identified this bill as requiring a ten-year projection of increased cost to the taxpayers or affected feepayers.

The excise tax imposed in the bill's Section 902 is different from the existing excise tax, which is a fixed dollar amount by type of aircraft. The proposed excise tax will be based on fair market value of each aircraft. There is no information on the fair market value of aircraft currently registered in Washington (Washington Department of Transportation registration data does not contain fair market value of aircraft).

Section 903 stipulates that the Department of Revenue (DOR) must develop a depreciation schedule for use in determining fair market value. DOR will develop a depreciation schedule if the legislation passes. Thus, until the fair market value of each aircraft is established and a depreciation schedule is established by DOR to estimate future values, how much excise tax to impose cannot be determine.

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