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HOUSE BILL NO. 590

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H0590.............................................................by MILLER
SALES TAX - INCREASE - Amends existing law to extend the sales tax to
certain services, to increase the sales tax by one-half cent and to provide
that the revenue from this tax would be used to replace property taxes
currently used for the support of public schools.

02/02    House intro - 1st rdg - to printing
02/03    Rpt prt - to Rev/Tax

Bill Text

H0590


                                                                        
 ||||              LEGISLATURE OF THE STATE OF IDAHO             ||||
Fifty-fourth Legislature                 Second Regular Session - 1998
                                                                        

                             IN THE HOUSE OF REPRESENTATIVES

                                    HOUSE BILL NO. 590

                                        BY MILLER

 1                                        AN ACT
 2    RELATING TO TAXATION POLICIES; AMENDING SECTION 33-802, IDAHO CODE, TO  REDUCE
 3        THE  SCHOOL  MAINTENANCE  AND  OPERATION LEVY TO ONE-TENTH OF ONE PERCENT;
 4        AMENDING SECTION 33-1002, IDAHO CODE, TO REPEAL OBSOLETE SECTIONS  AND  TO
 5        LIMIT THE LOCAL DISTRICTS' CONTRIBUTION CALCULATION AMOUNT; REPEALING SEC-
 6        TION  33-1002D,  IDAHO CODE; AMENDING SECTION 63-3608, IDAHO CODE, TO FUR-
 7        THER DEFINE PURCHASE; AMENDING SECTION 63-3609,  IDAHO  CODE,  TO  FURTHER
 8        DEFINE  RETAIL  SALE;  AMENDING  SECTION  63-3610,  IDAHO CODE, TO FURTHER
 9        DEFINE RETAILER; AMENDING SECTION 63-3611, IDAHO CODE, TO FURTHER DEFINE A
10        RETAILER ENGAGED IN BUSINESS IN  THIS  STATE;  AMENDING  SECTION  63-3612,
11        IDAHO CODE, TO FURTHER DEFINE A SALE BY INCLUDING CERTAIN SERVICES; AMEND-
12        ING  SECTION  63-3613,  IDAHO CODE, TO FURTHER DEFINE A SALES PRICE AND TO
13        MAKE TECHNICAL CORRECTIONS; AMENDING SECTION 63-3615, IDAHO CODE, TO  FUR-
14        THER  DEFINE  USE;  AMENDING  SECTION 63-3619, IDAHO CODE, TO INCREASE THE
15        RATE OF THE SALES TAX BY ONE-HALF PERCENT; AMENDING SECTION 63-3621, IDAHO
16        CODE, TO INCREASE THE RATE OF THE USE TAX BY  ONE-HALF  PERCENT;  AMENDING
17        SECTION  63-3622D,  IDAHO CODE, TO FURTHER DEFINE THE PRODUCTION EXEMPTION
18        TO INCLUDE CERTAIN SERVICES; AMENDING SECTION  63-3622K,  IDAHO  CODE,  TO
19        FURTHER  DEFINE OCCASIONAL SALES AND TO MAKE TECHNICAL CORRECTIONS; AMEND-
20        ING SECTION 63-3622S, IDAHO CODE, TO FURTHER DEFINE RADIO  AND  TELEVISION
21        BROADCASTING  EQUIPMENT; AMENDING SECTION 63-3622T, IDAHO CODE, TO FURTHER
22        DEFINE EQUIPMENT TO PRODUCE CERTAIN NEWSPAPERS; AMENDING SECTION 63-3622U,
23        IDAHO  CODE,  TO  FURTHER  DEFINE  FUNERAL  SERVICES;   AMENDING   SECTION
24        63-3622BB,  IDAHO  CODE, TO FURTHER DEFINE RESEARCH AND DEVELOPMENT AT THE
25        INEEL AND TO MAKE TECHNICAL CORRECTIONS; AMENDING SECTION 63-3622JJ, IDAHO
26        CODE, TO FURTHER DEFINE THE LOGGING EXEMPTION; AMENDING  SECTION  63-3624,
27        IDAHO  CODE,  TO CLARIFY THE ADMINISTRATION OF TAXATION CONCERNING SERVICE
28        AND TO MAKE TECHNICAL CORRECTIONS; AMENDING SECTION 63-3638,  IDAHO  CODE,
29        TO  REVISE  DISTRIBUTION PERCENTAGES TO REFLECT INCREASED REVENUE, TO PRO-
30        VIDE DISTRIBUTION TO THE PUBLIC SCHOOL INCOME FUND AND TO  MAKE  TECHNICAL
31        CORRECTIONS; DECLARING AN EMERGENCY, PROVIDING RETROACTIVE APPLICATION AND
32        PROVIDING AN EFFECTIVE DATE.

33    Be It Enacted by the Legislature of the State of Idaho:

34        SECTION  1.  That  Section  33-802, Idaho Code, be, and the same is hereby
35    amended to read as follows:

36        33-802.  SCHOOL LEVIES. Any tax levied for school purposes shall be a lien
37    on the property against which the tax is levied. The board of  trustees  shall
38    determine  the levies upon each dollar of taxable property in the district for
39    the ensuing fiscal year as follows:
40        1.  Bond, Interest and Judgment Obligation Levies. Such levies as shall be
41    required to satisfy all maturing bond, bond  interest,  and  judgment  obliga-
42    tions.
43        2.  Maximum School Maintenance and Operation Levies. Such levies for main-


                                          2

 1    taining  and  operating  the  schools  of  the district and for the payment of
 2    tuition and transportation, that do not exceed an amount equal to   four-
 3    tenths  of one percent (.4%) during tax year 1994, and do not exceed an amount
 4    equal to  three-tenths of one percent (.3%) during tax year  1995  
 5    and  thereafter   and do not exceed an amount equal to one-tenth of
 6    one percent (.1%) during tax year 1997 and thereafter , applied  to  the
 7    actual  or  adjusted  market  value for assessment purposes of the district as
 8    such valuation existed on December 31 of the  previous  year,  but  allowances
 9    necessary as a credit for prepaid taxes, as provided in section 63-1607, Idaho
10    Code, shall not be included in such maximum levies.
11        3.  Authorized  School  Maintenance  and Operation Levies. Such levies for
12    maintaining and operating the schools of the district and for the  payment  of
13    tuition  and  transportation  that  do  not  exceed one hundred eleven percent
14    (111%) of the local district's contribution authorized  in  subsection  2.  of
15    section  33-1002, Idaho Code. Implementation of the provisions of this subsec-
16    tion shall be authorized only after approval by a majority of  the  district's
17    electors  voting on the question. Levies otherwise authorized by law shall not
18    require an election.
19        4.  Supplemental Maintenance and Operation Levies. No levy  in  excess  of
20    the  levy  permitted by subsection 2. or 3. of this section shall be made by a
21    noncharter school district unless such a  supplemental  levy  in  a  specified
22    amount  and  for  a specified time not to exceed two (2) years be first autho-
23    rized through an election held pursuant to chapter 4, title  33,  Idaho  Code,
24    and approved by a majority of the district electors voting in such election. A
25    levy approved pursuant to this subsection may be reduced by a majority vote of
26    the board of trustees in the second year.
27        5.  Charter District Supplemental Maintenance and Operation. Levies pursu-
28    ant  to  the  respective  charter  of any such charter district shall be first
29    authorized through an election held pursuant to chapter  4,  title  33,  Idaho
30    Code, and approved by a majority of the district electors voting in such elec-
31    tion.
32        6.  The  Local  District Contribution. The local school district contribu-
33    tion levy is the amount utilized for calculating local district  participation
34    in the educational foundation program, which is applied to the adjusted market
35    value for assessment purposes, as such valuation existed on December 31 of the
36    previous year.
37        7.  The  board  of  trustees of any school district that has, for at least
38    seven (7) consecutive years, been authorized through an election held pursuant
39    to chapter 4, title 33, Idaho Code, to certify a supplemental  levy  that  has
40    annually  been equal to or greater than twenty percent (20%) of the total gen-
41    eral maintenance and operation fund, may submit the question of an  indefinite
42    term  supplemental  levy to the electors of the school district. Such question
43    shall clearly state the dollar amount that will be certified annually and that
44    the levy will be for an indefinite number  of  years.  The  question  must  be
45    approved  by  a majority of the district electors voting on the question in an
46    election held pursuant to chapter 4, title 33, Idaho Code. The  levy  approved
47    pursuant  to this subsection may be reduced by a majority vote of the board of
48    trustees during any fiscal year.

49        SECTION 2.  That Section 33-1002, Idaho Code, be, and the same  is  hereby
50    amended to read as follows:

51        33-1002.  EDUCATIONAL SUPPORT PROGRAM.  The educational support program is
52    calculated as follows:
53        1.  State  Educational Support Funds. Add the state appropriation, includ-


                                          3

 1    ing the moneys available in the public school income fund, together  with  all
 2    miscellaneous revenues to determine the total state funds.
 3        2.  From  the  total state funds subtract the following amounts needed for
 4    state support of special programs provided by a school district:
 5        a.  Pupil tuition-equivalency allowances as provided in section  33-1002B,
 6        Idaho Code;
 7        b.  Transportation  support  program as provided in section 33-1006, Idaho
 8        Code;
 9        c.  Feasibility studies allowance as provided in section  33-1007A,  Idaho
10        Code;
11        d.  The  approved costs for border district allowance, provided in section
12        33-1403, Idaho Code, as determined by the state superintendent  of  public
13        instruction;
14        e.  The  approved costs for exceptional child approved contract allowance,
15        provided in subsection 2. of section 33-2004, Idaho Code, as determined by
16        the state superintendent of public instruction;
17        f.  Certain expectant and delivered mothers allowance as provided in  sec-
18        tion 33-2006, Idaho Code;
19        g.  Salary  based apportionment calculated as provided in sections 33-1004
20        through 33-1004F, Idaho Code;
21        h.  Unemployment insurance benefit payments according to the provisions of
22        section 72-1349C, Idaho Code;
23        i.   For programs to provide basic curricula necessary to enable stu-
24        dents  to enter academic or vocational postsecondary  education  programs,
25        an allocation of $300 per support unit for the 1994-95 school year only;
26        j.  For provision of teacher supplies to facilitate classroom instruction,
27        an allocation of $200 per support unit for the 1994-95 school year only;
28        k.  For  expenditure  as provided by the public school technology program,
29        $10,400,000 for the 1994-95 school year;
30        l.  For additional school innovation pilot project grants based on  recom-
31        mendations  of  the  Idaho  school  reform  committee,  $2,000,000 for the
32        1994-95 school year; and
33        m.   For the support of provisions that provide a  safe  environment
34        conducive  to student learning and maintain classroom discipline, an allo-
35        cation of $300 per support unit;
36         n  j .  Any additional amounts as required by stat-
37        ute to effect administrative adjustments or as  specifically  required  by
38        the provisions of any bill of appropriation;
39    to secure the state educational support funds.
40        3.  Local  Districts'  Contribution  Calculation.  Without  including  any
41    allowance  as a credit for prepaid taxes as provided by section 63-1607, Idaho
42    Code, the local  districts'  contribution  shall  be    four-tenths  per-
43    cent(.4%)   one-tenth percent (.1%)  during fiscal year 
44    1994-95      1997-98   and each year thereafter, of the total
45    state adjusted market value for assessment purposes for the previous year with
46    such value being determined by the provisions of section 63-315,  Idaho  Code,
47    and    four-tenths  percent  (.4%)     one-tenth percent (.1%)
48     during fiscal year  1994-95   1997-98   and  each
49    year  thereafter,  of the cooperative electrical associations' property values
50    that have been derived from the taxes paid in lieu of ad valorem taxes for the
51    previous year as provided in section 63-3502, Idaho Code.
52        4.  Educational Support Program Distribution Funds.  Add  the  local  dis-
53    tricts' contribution, subsection 3. of this section, and the state educational
54    support  program  funds, subsection 1. of this section, together to secure the
55    total educational support program distribution funds.


                                          4

 1        5.  Average Daily Attendance. The total  state  average  daily  attendance
 2    shall  be  the  sum  of the average daily attendance of all of the school dis-
 3    tricts of the state. The state board of education shall establish  rules  set-
 4    ting  forth  the  procedure to determine average daily attendance and the time
 5    for, and method of, submission of such report. Average daily attendance calcu-
 6    lation shall be carried out to the nearest hundredth. Computation  of  average
 7    daily attendance shall also be governed by the provisions of section 33-1003A,
 8    Idaho Code.
 9        6.  Support  Units.  The  total state support units shall be determined by
10    using   the tables set out hereafter called computation of  kindergarten  sup-
11    port  units, computation of elementary support units, computation of secondary
12    support units, computation of exceptional education support units, and  compu-
13    tation  of  alternative  school secondary support units. The sum of all of the
14    total support units of all school districts of the state shall  be  the  total
15    state support units.
16                      COMPUTATION OF KINDERGARTEN SUPPORT UNITS
17    Average Daily
18    Attendance            Attendance Divisor             Units Allowed
19    41 or more     ....   40.......................      1 or more as computed
20    31 -  40.99 ADA....    -.......................      1
21    26 -  30.99 ADA....    -.......................       .85
22    21 -  25.99 ADA....    -.......................       .75
23    16 -  20.99 ADA....    -.......................       .6
24     8 -  15.99 ADA....    -.......................       .5
25     1 -   7.99 ADA....    -.......................      count as elementary

26                       COMPUTATION OF ELEMENTARY SUPPORT UNITS
27    Average Daily
28    Attendance            Attendance Divisor             Minimum Units Allowed
29    300 or more ADA........................................  15
30                        ..23...grades 4,5 & 6....
31                        ..22...grades 1,2 & 3....1994-95
32                        ..21...grades 1,2 & 3....1995-96
33                        ..20...grades 1,2 & 3....1996-97
34                              and each year thereafter.
35    160   to  299.99 ADA... 20.....................             8.4
36    110   to  159.99 ADA... 19.....................             6.8
37     71.1 to  109.99 ADA... 16.....................             4.7
38     51.7 to   71.0  ADA... 15.....................             4.0
39     33.6 to   51.6  ADA... 13.....................             2.8
40     16.6 to   33.5  ADA... 12.....................             1.4
41      1.0 to   16.5  ADA... n/a....................             1.0

42                        COMPUTATION OF SECONDARY SUPPORT UNITS
43    Average Daily
44    Attendance            Attendance Divisor             Minimum Units Allowed
45    750 or more      .... 18.5.....................            47
46    400 -  749.99 ADA.... 16.......................            28
47    300 -  399.99 ADA.... 14.5.....................            22
48    200 -  299.99 ADA.... 13.5.....................            17
49    100 -  199.99 ADA.... 12.......................             9
50     99.99 or fewer       Units allowed as follows:
51             Grades 7-12  .........................             8
52             Grades 9-12  .........................             6
53             Grades 7- 9  .........................             1 per 14 ADA


                                          5

 1             Grades 7- 8  .........................             1 per 16 ADA

 2                  COMPUTATION OF EXCEPTIONAL EDUCATION SUPPORT UNITS
 3    Average Daily
 4    Attendance            Attendance Divisor             Minimum Units Allowed
 5    14 or more ....       14.5.....................      1 or more as computed
 6    12 -  13.99....        -.......................      1
 7     8 -  11.99....        -.......................       .75
 8     4 -   7.99....        -.......................       .5
 9     1 -   3.99....        -.......................       .25

10              COMPUTATION OF ALTERNATIVE SCHOOL SECONDARY SUPPORT UNITS
11    Pupils in Attendance  Attendance Divisor             Minimum Units Allowed
12    12 or more..........  12......................       1 or more as computed

13    In applying these tables to any given separate attendance unit, no school dis-
14    trict  shall receive less total money than it would receive if it had a lesser
15    average daily attendance in such separate attendance  unit.  In  applying  the
16    kindergarten  table  to a kindergarten program of less days than a full school
17    year, the support unit allowance shall be in ratio to the number of days of  a
18    full  school year. The tables for exceptional education and alternative school
19    secondary support units shall be applicable only for programs approved by  the
20    state  department  of education following rules established by the state board
21    of education. Moneys generated from computation of support units for  alterna-
22    tive  schools  shall  be utilized for alternative school programs. School dis-
23    trict administrative and facility costs may be included as part of the  alter-
24    native school expenditures.
25        7.  State Distribution Factor per Support Unit. Divide educational support
26    program distribution funds, after subtracting the amounts necessary to pay the
27    obligations  specified  in  subsection  2. of this section, by the total state
28    support units to secure the state distribution factor per support unit.
29        8.  District Share of State Funds for Educational Support Program.  Ascer-
30    tain  a district's share of state funds for the educational support program as
31    follows:
32        a.  District Contribution Calculation. Without including any allowance  as
33        a  credit  for  prepaid taxes, as provided in section 63-1607, Idaho Code,
34        the district contribution  calculation shall be the rate determined  under
35        subsection 3. of this section.
36        b.  District  Support  Units.  The number of support units for each school
37        district in the state shall be determined as follows:
38             (1)  Divide the actual average daily attendance,  excluding  students
39             approved  for inclusion in the exceptional child educational program,
40             for the administrative schools and each of the  separate  schools  by
41             the    appropriate  divisor  from the tables of support units in this
42             section,   then add the quotients to obtain  the  district's  support
43             units  allowance  for regular students, kindergarten through grade 12
44             including alternative  school  secondary  students.  Calculations  in
45             application  of  this  subsection shall be carried out to the nearest
46             tenth.
47             (2)  Divide the combined totals of the average  daily  attendance  of
48             all   preschool, handicapped, kindergarten, elementary, secondary and
49             juvenile  detention  center  students  approved  for inclusion in the
50             exceptional child program of the district by the appropriate  divisor
51             from the table for computation of exceptional education support units
52             to  obtain  the  number  of  support units allowed for the district's


                                          6

 1             approved exceptional child program. Calculations for this  subsection
 2             shall be carried out to the nearest tenth when more than one (1) unit
 3             is allowed.
 4             (3)  The  total  number of support units of the district shall be the
 5             sum of the total  support  units  for  regular  students,  subsection
 6             8.b.(1)  of  this  section,  and  the support units allowance for the
 7             approved exceptional child program, subsection 8.b.(2) of  this  sec-
 8             tion.
 9        c.  Total  District Allowance Educational Program. Multiply the district's
10        total number of support units, carried out to the nearest  tenth,  by  the
11        state  distribution  factor  per  support unit and to this product add the
12        approved amount of programs of the district provided in subsection  2.  of
13        this  section to secure the district's total allowance for the educational
14        support program.
15        d.  District Share. To secure the district's share of state apportionment,
16        subtract the amount of the local district contribution  calculation,  sub-
17        section  3.  of this section, from the amount of the total district allow-
18        ance, subsection 8.c. of this section.
19        e.  Adjustment of District Share. The contract salary of every noncertifi-
20        cated teacher shall be subtracted from the district's share as  calculated
21        from the provisions of subsection 8.d. of this section.

22        SECTION  3.  That Section 33-1002D, Idaho Code, be, and the same is hereby
23    repealed.

24        SECTION 4.  That Section 63-3608, Idaho Code, be, and the same  is  hereby
25    amended to read as follows:

26        63-3608.  PURCHASE.  The  term  "purchase"  means  any  transfer,  rental,
27    exchange,  or  barter, conditional or otherwise, in any manner or by any means
28    whatsoever, of tangible personal property  or service  for  a  con-
29    sideration.  A  transaction  whereby the possession of property is transferred
30    but the seller retains the title as security for the payment of the price is a
31    purchase. A transfer for a consideration of any  publication  or  of  tangible
32    personal  property which has been produced, fabricated, or printed to the spe-
33    cial order of the customer is also a purchase.

34        SECTION 5.  That Section 63-3609, Idaho Code, be, and the same  is  hereby
35    amended to read as follows:

36        63-3609.  RETAIL  SALE -- SALE AT RETAIL. The terms "retail sale" or "sale
37    at retail" means a sale of tangible personal property  or service  
38    for  any purpose other than resale of that property  or service  in
39    the regular course of business or lease or rental of that property in the reg-
40    ular course of business where such rental or lease is  taxable  under  section
41    63-3612(h), Idaho Code.
42        (a)  All persons engaged in constructing, altering, repairing or improving
43    real  estate,  are consumers of the material used by them; all sales to or use
44    by such persons of tangible personal property are taxable whether or not  such
45    persons intend resale of the improved property.
46        (b)  For  the  purpose  of  this chapter, the sale or purchase of personal
47    property incidental to the sale of real  property  or  used  mobile  homes  is
48    deemed a sale of real property.

49        SECTION  6.  That  Section 63-3610, Idaho Code, be, and the same is hereby


                                          7

 1    amended to read as follows:

 2        63-3610.  RETAILER. The term "retailer" includes:
 3        (a)  Every seller who makes any retail sale or sales of tangible  personal
 4    property    or service  and every person engaged in the business of
 5    making retail sales at auction of tangible personal property owned by the per-
 6    son or others.
 7        (b)  Every person engaged in the business of  making  sales  for  storage,
 8    use,  or  other  consumption  or in the business of making sales at auction of
 9    tangible personal property owned by the person or others for storage, use,  or
10    other consumption.
11        (c)  Every  person  making more than two (2) retail sales of tangible per-
12    sonal property during any twelve (12) month period, including  sales  made  in
13    the  capacity of assignee for the benefit of creditors, or receiver or trustee
14    in bankruptcy, or every person making fewer sales who  holds  himself  out  as
15    engaging  in the business of selling such tangible personal property at retail
16    or who sells a self-propelled motor vehicle.
17        (d)  When the state tax commission determines that it is necessary for the
18    efficient administration of this act to regard any salesmen,  representatives,
19    peddlers,  or  canvassers as agents of the dealers, distributors, supervisors,
20    or employers under whom they operate or from whom  they  obtain  the  tangible
21    personal  property sold by them, irrespective of whether they are making sales
22    on their own behalf or on behalf of such dealers,  distributors,  supervisors,
23    or  employers,  the state tax commission may so regard them and may regard the
24    dealers, distributors, supervisors, or employers as retailers for the  purpose
25    of this act.
26        (e)  Persons  conducting  both  contracting and retailing activities. Such
27    persons must keep separate accounts for the retail portion of  their  business
28    and pay tax in the usual fashion on this portion.

29        SECTION  7.  That  Section 63-3611, Idaho Code, be, and the same is hereby
30    amended to read as follows:

31        63-3611.  RETAILER ENGAGED IN BUSINESS IN THIS STATE. "Retailer engaged in
32    business in this state" as used in this chapter means and includes any of  the
33    following:
34        (a)  Any  retailer  maintaining, occupying or using, permanently or tempo-
35    rarily, directly or indirectly, or through a subsidiary or agent, by  whatever
36    name called, an office,  place of distribution, sales or sample room or place,
37    warehouse  or storage place, or other place of business or maintaining a stock
38    of goods.
39        (b)  Any retailer having any representative, agent, salesman, canvasser or
40    solicitor operating in this state under the authority of the retailer  or  its
41    subsidiary for the purpose of selling, delivering, installing or the taking of
42    orders for any tangible personal property.
43        (c)  Any  retailer,  with  respect  to a lease or rental, deriving rentals
44    form a lease or rental of tangible personal property situated in this state.
45        (d)  Any retailer engaging in any activity in connection with servicing or
46    installing tangible personal property in this state.
47        (e) Any retailer owned or controlled by the same interests  which  own  or
48    control  any  retailer  engaged  in  business in the same or a similar line of
49    business in this state.
50        (f)  Any retailer having a franchisee  or  licensee  operating  under  its
51    tradename  if  the franchisee or licensee is required to collect the tax under
52    the provisions of this section.


                                          8

 1         (g)  Any retailer performing services within this state, the sale of
 2    which is subject to tax under the provisions of this chapter. 

 3        SECTION 8.  That Section 63-3612, Idaho Code, be, and the same  is  hereby
 4    amended to read as follows:

 5        63-3612.  SALE.  (1) The term "sale" means any transfer of title, exchange
 6    or barter, conditional or otherwise, of tangible personal property for a  con-
 7    sideration  and  shall include any similar transfer of possession found by the
 8    state tax commission to be in lieu of, or equivalent to, a transfer of  title,
 9    exchange or barter.
10        (2)  "Sale" shall also include the following transactions when a consider-
11    ation is transferred, exchanged or bartered:
12        (a)  Producing, fabricating, processing, printing, or imprinting of tangi-
13        ble  personal property for consumers who furnish, either directly or indi-
14        rectly, the tangible personal property used in the producing, fabricating,
15        processing, printing, or imprinting.
16        (b)  Furnishing,  preparing,  or  serving  food,  meals,  or  drinks   and
17        nondepreciable  goods and services directly consumed by customers included
18        in the charge thereof.
19        (c)  A transfer of possession of property where  the  seller  retains  the
20        title as security for the payment of the sales price.
21        (d)  A  transfer  of the title or possession of tangible personal property
22        which has been produced, fabricated, or printed to the  special  order  of
23        the customer, or of any publication.
24        (e)  Admission to a place or for an event in Idaho.
25        (f)  The  use  of  or the privilege of using tangible personal property or
26        facilities for recreation.
27        (g)  Providing hotel, motel, campground, or trailer court  accommodations,
28        nondepreciable goods directly consumed by customers and included services,
29        except  where  residence  is  maintained continuously under the terms of a
30        lease or similar agreement for a period in excess of thirty (30) days.
31        (h)  The lease or rental of tangible personal property.
32        (i)  The intrastate transportation for hire by air of freight  or  passen-
33        gers,  except  (1)  as part of a regularly scheduled flight by a certified
34        air carrier, under authority of the United States, or (2)  when  providing
35        air ambulance services.
36          (j)  Receipts  from  all  activities  described  in this subsection
37        below:
38             (i)   Landscape planning and landscape architectural  and  counseling
39             services;
40             (ii)  Lawn  and  garden  services, and ornamental shrub and tree ser-
41             vices;
42             (iii) Consumer credit reporting, mercantile reporting and  adjustment
43             and collection services;
44             (iv)  Services  to  dwellings  and  other buildings for disinfecting,
45             pest control and cleaning and maintenance;
46             (v)   Temporary parking of automobiles usually on an hourly, daily or
47             monthly contract or fee basis;
48             (vi)  Consulting actuaries, writers of advertising  copy,  radio  and
49             television   service  announcers,  art  restoration,  cloud  seeding,
50             artists' studios, artists, authors, consulting chemists, nuclear con-
51             sultants,   consulting    entomologists,    consulting    geologists,
52             ghostwriters,  hand painters of greeting cards, inventors, lecturers,
53             music arrangers, newspaper columnists, consulting physicists,  indus-


                                          9

 1             trial  psychologists,  sculptors' studios, songwriters, stained glass
 2             artists,  weather  forecasters,  weather  modification  services   or
 3             writers;
 4             (vii) Services  provided  generally to individuals including laundry,
 5             cleaning and garment services, photographic  studios,  beauty  shops,
 6             barber  shops,  shoe  repair shops, provision of providing tax return
 7             preparation services without also providing accounting, auditing,  or
 8             bookkeeping  services,  and miscellaneous person's services including
 9             babysitting bureaus, bartering services for individuals,  birth  cer-
10             tificate  agencies,  coin operated blood pressure or heart rate test-
11             ing, buyers' clubs, car title and tag service, checkroom  concessions
12             or  services,  clothing rental, coin-operated services machine opera-
13             tion  of scales, shoeshine, lockers, college clearinghouses,  comfort
14             station operation, computer photography or portraits, consumer buying
15             service,  costume  rental, dating service, debt counseling or adjust-
16             ment service to individuals, depilatory salons, diet workshops, dress
17             suit rental, electrolysis, escort services,  genealogical  investiga-
18             tion  service,  hair weaving or replacement service not provided by a
19             licensed medical doctor, locker  rental,  marriage  bureaus,  massage
20             parlors,  porter  service,  quilting for individuals, restroom opera-
21             tion, scalp treatment service not provided by a licensed medical doc-
22             tor, steam baths, tanning  salons,  tattoo  parlors,  Turkish  baths,
23             tuxedo rental, valet parking, wardrobe service and privately operated
24             wedding chapels.
25        (k)  Receipts  from  applying,  installing, cleaning, altering, improving,
26        decorating, treating, storing or repairing tangible personal property.
27        (l)  Receipts from the sale of sewer and garbage or trash services.
28        (m)  Receipts from the sale of lottery tickets  pursuant  to  chapter  74,
29        title 67, Idaho Code, or from the sale of tickets for pari-mutuel wagering
30        conducted pursuant to chapter 25, title 54, Idaho Code. 
31        (3)  As  used  in  subsections  (2)(b)  and  (2)(g) of this section, goods
32    "directly consumed by customers" shall not be interpreted to mean any  linens,
33    bedding, cloth napkins or similar nondisposable property.

34        SECTION  9.  That  Section 63-3613, Idaho Code, be, and the same is hereby
35    amended to read as follows:

36        63-3613.  SALES PRICE. (a) The term "sales price" means the  total  amount
37    for which tangible personal property, including services agreed to be rendered
38    as  a  part  of the sale,  or services subject to tax under this chapter,
39     is sold, rented or leased, valued in money, whether paid  in  money  or
40    otherwise, without any deduction on account of any of the following:
41        1.  The  cost  of  the  property  or service  sold. However, in
42        accordance with such rules as the state tax commission  may  prescribe,  a
43        deduction  may  be  taken  if the retailer has purchased property for some
44        purpose other than resale or rental, has reimbursed  his  vendor  for  tax
45        which  the  vendor is required to pay to the state or has paid the use tax
46        with respect to the property, and has resold or rented the property  prior
47        to  making  any use of the property other than retention, demonstration or
48        display while holding it for sale in the regular course  of  business.  If
49        such  a  deduction  is  taken by the retailer, no refund or credit will be
50        allowed to his vendor with respect to the sale of the property.
51        2.  The cost of materials used, labor or  service  cost,  losses,  or  any
52        other expense.
53        3.  The cost of transportation of the property prior to its sale.


                                          10

 1        4.  The  face  value  of manufacturer's discount coupons. A manufacturer's
 2        discount coupon is a price reduction coupon presented by a consumer  to  a
 3        retailer  upon  purchase  of  a  manufacturer's product, the face value of
 4        which may only be reimbursed by the manufacturer to the retailer.
 5        (b)  The term "sales price" does not include any of the following:
 6        1.  Retailer discounts allowed and taken on sales, but only to the  extent
 7        that  such  retailer  discounts  represent price adjustments as opposed to
 8        cash discounts offered only as an inducement for prompt payment.
 9        2.  Any sums allowed on merchandise accepted in payment of other  merchan-
10        dise,  provided  that this allowance shall not apply to the sale of a "new
11        manufactured home" or a "modular building" as defined herein.
12        3.  The amount charged for property returned by customers when the  amount
13        charged  therefor is refunded either in cash or credit; but this exclusion
14        shall not apply in any instance when the customer, in order to obtain  the
15        refund, is required to purchase other property at a price greater than the
16        amount charged for the property that is returned.
17        4.  The  amount  charged  for  labor or services rendered in installing or
18        applying the property sold, provided that said amount is stated separately
19        and such separate statement is not used as a means of avoiding  imposition
20        of this tax upon the actual sales price of the tangible personal property;
21        except  that  charges by a manufactured homes dealer for set up of a manu-
22        factured home shall be included in the "sales price" of such  manufactured
23        home.
24        5.  The  amount  of any tax (not including, however, any manufacturers' or
25        importers' excise tax) imposed by the United States upon or  with  respect
26        to retail sales whether imposed upon the retailer or the consumer.
27        6.  The  amount  charged  for  finance  charges, carrying charges, service
28        charges, time-price differential, or interest on deferred  payment  sales,
29        provided  such  charges  are not used as a means of avoiding imposition of
30        this tax upon the actual sales price of the tangible personal property.
31        7.  Delivery and handling charges for transportation of tangible  personal
32        property to the consumer, provided that the transportation is stated sepa-
33        rately and the separate statement is not used as a means of avoiding impo-
34        sition  of  the  tax upon the actual sales  price of the tangible personal
35        property; except that charges by a manufactured homes dealer for transpor-
36        tation of a manufactured home shall be included in the  "sales  price"  of
37        such manufactured home.
38        8.  Manufacturers'  rebates  when  used  at the time of a retail sale as a
39        down payment on or reduction to the retail sales price of a motor  vehicle
40        to  which  the  rebate  applies. A manufacturer's rebate is a cash payment
41        made by a manufacturer to a consumer who has purchased  or  is  purchasing
42        the manufacturer's product from the retailer.
43        9.  The  amount of any fee imposed upon an outfitter as defined in section
44        36-2102, Idaho Code, by a governmental entity pursuant to statute for  the
45        purpose  of  conducting  outfitting activities on land or water subject to
46        the jurisdiction of the governmental entity,  provided  that  the  fee  is
47        stated separately and is presented as a use fee paid by the outfitted pub-
48        lic to be passed through to the governmental entity.
49        10. The  amount of any discount or other price reduction on telecommunica-
50        tions equipment when offered as an inducement to the consumer to  commence
51        or continue telecommunications service, or the amount of any commission or
52        other  indirect  compensation received by a retailer or seller as a result
53        of the consumer commencing or continuing telecommunications service.
54        (c)  The sales price of a "new manufactured home" or a "modular  building"
55    as  defined  in this act shall be limited to and include only fifty-five 


                                          11

 1    per cent   percent  (55%) of the  sales  price  as  otherwise
 2    defined herein.
 3        (d)  For sales made on and after January 1, 1967, taxes previously paid on
 4    amounts represented by accounts found to be worthless and actually charged off
 5    for  income  tax purposes may be credited upon a subsequent payment of the tax
 6    provided in this chapter or, if no such tax is due, refunded. If such accounts
 7    are thereafter collected, a tax shall be paid upon the amount so collected.
 8        (e)  Tangible personal property when sold at retail for more  than  eleven
 9    cents  ($.11)  but less than one dollar and one cent ($1.01) through a vending
10    machine shall be deemed to have sold at a sales price  equal  to  one  hundred
11    seventeen  per cent   percent  (117%) of the price which
12    is paid for such tangible personal property and/or its component parts includ-
13    ing packaging by the owner or operator of the vending machines.

14        SECTION  10.  That Section 63-3615, Idaho Code, be, and the same is hereby
15    amended to read as follows:

16        63-3615.  STORAGE -- USE. (a) The term "storage" includes any  keeping  or
17    retention  in  this state for any purpose except sale in the regular course of
18    business or subsequent use solely outside  this  state  of  tangible  personal
19    property purchased from a retailer.
20        (b)  The  term "use" includes the exercise of any right or power over tan-
21    gible personal property incident to the ownership or the leasing of that prop-
22    erty or the exercise of any right or power over tangible personal property  by
23    any person in the performance of a contract, or to fulfill contract or subcon-
24    tract obligations, whether the title of such property be in the subcontractor,
25    contractor,  contractee,  subcontractee,  or  any other person, or whether the
26    titleholder of such property would be subject to the sales or use tax,  unless
27    such property would be exempt to the titleholder under section 63-3622D, Idaho
28    Code, except that the term "use" does not include the sale of that property in
29    the regular course of business.
30        (c)  "Storage"  and  "use" do not include the keeping, retaining, or exer-
31    cising of any right or power over tangible personal property for  the  purpose
32    of  subsequently  transporting  it outside the state for use thereafter solely
33    outside the state, or for the purpose of being processed, fabricated, or manu-
34    factured into, attached to, or incorporated into other tangible personal prop-
35    erty to be transported outside the state, and thereafter used  solely  outside
36    the state.
37          (d)  The  term "use" includes receipt, in this state of the benefit
38    of services enumerated in section 63-3612, Idaho Code. 

39        SECTION 11.  That Section 63-3619, Idaho Code, be, and the same is  hereby
40    amended to read as follows:

41        63-3619.  IMPOSITION  AND  RATE OF THE SALES TAX.  An excise tax is hereby
42    imposed upon each sale at retail at the rate of five    per  cent  
43      and  one-half  percent  (5 .5 %) of the sales price of
44    all property subject to taxation under this act and such amount shall be  com-
45    puted monthly on all sales at retail within the preceding month.
46        (a)  The tax shall apply to, be computed on, and collected for all credit,
47    instalment,  conditional  or  similar sales at the time of the sale or, in the
48    case of rentals, at the time the rental is charged.
49        (b)  The tax hereby imposed shall be collected by the  retailer  from  the
50    consumer.
51        (c)  The  state  tax  commission shall provide schedules for collection of


                                          12

 1    the tax on sales which involve a fraction of a dollar. The retailer shall cal-
 2    culate the tax upon the entire amount of the purchases of the consumer made at
 3    a particular time and not separately upon each item  purchased.  The  retailer
 4    may  retain  any amount collected under the bracket system prescribed which is
 5    in excess of the amount of tax for which he is liable to the state during  the
 6    period as compensation for the work of collecting the tax.
 7        (d)  It  is unlawful for any retailer to advertise or hold out or state to
 8    the public or to any customer, directly or indirectly, that  the  tax  or  any
 9    part  thereof  will be assumed or absorbed by the retailer or that it will not
10    be added to the selling price of the property sold or that if added it or  any
11    part thereof will be refunded. Any person violating any provision of this sec-
12    tion is guilty of a misdemeanor.
13        (e)  The  tax  commission may by rule provide that the amount collected by
14    the retailer from the customer in reimbursement of the tax be displayed  sepa-
15    rately  from  the list price, the price advertised on the premises, the marked
16    price, or other price on the sales slip or other proof of sale.
17        (f)  The tax imposed by this act shall apply to the sales of any  tangible
18    personal  property  to  contractors purchasing such property for resale to the
19    United States or for use in the  performance  of  contracts  with  the  United
20    States.

21        SECTION  12.  That Section 63-3621, Idaho Code, be, and the same is hereby
22    amended to read as follows:

23        63-3621.  IMPOSITION AND RATE OF THE USE TAX -- EXEMPTIONS. An excise  tax
24    is  hereby  imposed on the storage, use, or other consumption in this state of
25    tangible personal property acquired on or after July  1,  1965,  for  storage,
26    use,  or  other  consumption  in this state  or service performed in this
27    state  at the rate of five  per cent   and one-half per-
28    cent  (5 .5 %) of the value of the property  or  service
29    , and a recent sales price shall be presumptive evidence of the value of
30    the  property unless the property is wireless telecommunications equipment, in
31    which case a recent sales price shall be conclusive evidence of the  value  of
32    the property.
33        (a)  Every  person  storing, using, or otherwise consuming, in this state,
34    tangible personal property  or service  is liable for the tax.  His
35    liability  is  not  extinguished   until  the  tax has been paid to this state
36    except that a receipt from a retailer maintaining a place of business in  this
37    state  or  engaged  in business in this state given to the purchaser is suffi-
38    cient to relieve the purchaser from further liability for the tax to which the
39    receipt refers. A retailer shall not be considered to  have  stored,  used  or
40    consumed wireless telecommunications equipment by virtue of giving, selling or
41    otherwise transferring such equipment at a discount as an inducement to a con-
42    sumer to commence or continue a contract for telecommunications service.
43        (b)  Every retailer engaged in business in this state, and making sales of
44    tangible  personal  property   or service  for the storage, use, or
45    other consumption in this  state, not exempted under  section  63-3622,  Idaho
46    Code, shall, at the time of making the sales or, if storage, use or other con-
47    sumption  of  the tangible personal property is not then taxable hereunder, at
48    the time the storage, use or other consumption becomes  taxable,  collect  the
49    tax  from  the  purchaser  and give to the purchaser a receipt therefor in the
50    manner and form prescribed by the state tax commission.
51        (c)  The provisions of this section shall not apply when the retailer pays
52    sales tax on the transaction and collects reimbursement  for  such  sales  tax
53    from the customer.


                                          13

 1        (d)  Every  retailer  engaged  in  business in this state or maintaining a
 2    place of business in this state shall register with the state  tax  commission
 3    and give the name and address of all agents operating in this state, the loca-
 4    tion  of all distributions or sales houses or offices or other places of busi-
 5    ness in this state, and such other information as the state tax commission may
 6    require.
 7        (e)  For the purpose of the proper administration of this act and to  pre-
 8    vent  evasion  of the use tax and the duty to collect the use tax, it shall be
 9    presumed that tangible personal property  or service  sold  by  any
10    person  for delivery in this state is sold for storage, use, or other consump-
11    tion in this state. The burden of proving the sale is tax exempt is  upon  the
12    person  who  makes the sale unless he obtains from the purchaser a resale cer-
13    tificate to the effect that the property is purchased for resale or rental. It
14    shall be presumed that sales made to a person who has completed a resale  cer-
15    tificate for the seller's records are not taxable and the seller need not col-
16    lect  sales  or  use  taxes unless the tangible personal property purchased is
17    taxable to the purchaser as a matter of law in the particular instance claimed
18    on the resale certificate.
19        A seller may accept a resale certificate from a  purchaser  prior  to  the
20    time  of  sale,  at the time of sale, or at any reasonable time after the sale
21    when necessary to establish the privilege of the exemption. The resale certif-
22    icate relieves the  person selling the property from the burden of proof  only
23    if  taken  from  a person who is engaged in the business of selling or renting
24    tangible personal property and who holds the permit provided  for  by  section
25    63-3620,  Idaho  Code,  or  who  is a retailer not engaged in business in this
26    state, and who, at the time of  purchasing  the  tangible  personal  property,
27    intends  to  sell or rent it in the regular course of business or is unable to
28    ascertain at the time of purchase whether the property will be sold or will be
29    used for some other purpose. Other than as provided elsewhere in this section,
30    when a resale certificate, properly executed, is presented to the seller,  the
31    seller  has  no  duty or obligation to collect sales or use taxes in regard to
32    any sales transaction so documented regardless of whether the purchaser  prop-
33    erly  or  improperly claimed an exemption. A seller so relieved of the obliga-
34    tion to collect tax is also relieved of any liability  to  the  purchaser  for
35    failure  to collect tax  or for making any report or disclosure of information
36    required or permitted under this chapter.
37        The resale certificate shall bear the name and address of  the  purchaser,
38    shall  be  signed  by the purchaser or his agent, shall indicate the number of
39    the permit issued to the purchaser, or that the purchaser is  an  out-of-state
40    retailer,  and  shall  indicate the general character of the tangible personal
41    property sold by the purchaser in the regular course of business. The certifi-
42    cate shall be substantially in such form as the state tax commission may  pre-
43    scribe.
44        (f)  If  a  purchaser  who gives a resale certificate makes any storage or
45    use of the property  or service  other than  retention,  demonstra-
46    tion  or display while holding  it for sale in the regular course of business,
47    the storage or use is taxable as of the time the property is first  so  stored
48    or used.
49        (g)  Any  person  violating  any  provision of this section is guilty of a
50    misdemeanor and punishable by a fine not in  excess  of  one  hundred  dollars
51    ($100), and each violation shall constitute a separate offense.
52        (h)  It  shall  be  presumed  that  tangible  personal property shipped or
53    brought to this state by the purchaser   or  service  performed  in  this
54    state    was  purchased from  a retailer, for storage, use or other con-
55    sumption in this state.


                                          14

 1        (i)  It shall be presumed that tangible personal property  delivered  out-
 2    side  this state to a purchaser known by the retailer to be a resident of this
 3    state was purchased from a retailer for storage, use, or other consumption  in
 4    this  state.  This presumption may be controverted by evidence satisfactory to
 5    the state tax commission that the property was not purchased for storage, use,
 6    or other consumption in this state.
 7        (j)  When the tangible personal property  or service    subject
 8    to use  tax has been subjected to a general retail sales or use tax by another
 9    state of the United States in an amount equal to or greater than the amount of
10    the  Idaho  tax,  and evidence can be given of such payment, the property will
11    not be subject to Idaho use tax. If the amount paid the other  state was less,
12    the property  or service  will be subject to use tax to the  extent
13    that  the  Idaho tax exceeds the tax paid to the other state. For the purposes
14    of this subsection, a registration certificate  or  title  issued  by  another
15    state  or  subdivision thereof for a vehicle or trailer or a vessel as defined
16    in section 67-7003, Idaho Code, shall be sufficient evidence of payment  of  a
17    general retail sales or use tax.
18        (k)  The  use  tax herein imposed shall not apply to the use by a nonresi-
19    dent of this state of a motor vehicle which is registered  or  licensed  under
20    the laws of the state of his residence and is not used in this state more than
21    a  cumulative  period  of  time  totaling  ninety (90) days in any consecutive
22    twelve (12) months, and which is not required to  be  registered  or  licensed
23    under  the  laws  of  this  state,  or to the use of household goods, personal
24    effects and private automobiles by a bona fide resident of this state, if such
25    articles were acquired by such person in another state while a bona fide resi-
26    dent thereof and primarily for use outside this state  and  if  such  use  was
27    actual  and  substantial,  but if an article was acquired  less than three (3)
28    months prior to the time he entered this state, it will be presumed  that  the
29    article was acquired for use in this state and that its use outside this state
30    was not actual and substantial.
31        (l)  The  use  tax  herein  imposed shall not apply to the storage, use or
32    other consumption of tangible personal property which is or will  be  incorpo-
33    rated  into  real  property  and  which has been donated to and has become the
34    property of:
35        (1)  A nonprofit organization as defined in section 63-3622O, Idaho  Code;
36        or
37        (2)  The state of Idaho; or
38        (3)  Any political subdivision of the state.
39    This  exemption applies whether the tangible personal property is incorporated
40    in real property by the donee, a contractor or subcontractor of the donee,  or
41    any other person.

42        SECTION 13.  That Section 63-3622D, Idaho Code, be, and the same is hereby
43    amended to read as follows:

44        63-3622D.  PRODUCTION EXEMPTION. There are exempted from the taxes imposed
45    by this chapter:
46        (a)  The  sale  at retail, storage, use or other consumption in this state
47    of:
48        (1)  Tangible personal property which will enter into and become an ingre-
49        dient or component part of tangible personal property manufactured,  proc-
50        essed, mined, produced or fabricated for sale.
51        (2)  Tangible  personal  property    or  service  primarily and
52        directly used  or consumed in or during a manufacturing, processing,  min-
53        ing,  farming,  or  fabricating  operation, including, but not limited to,


                                          15

 1        repair parts, lubricants, hydraulic oil, and coolants, which become a com-
 2        ponent part of such tangible personal property; provided that the  use  or
 3        consumption  of  such tangible personal property is necessary or essential
 4        to the performance of such operation.
 5        (3)  Chemicals, catalysts, and other materials which are used for the pur-
 6        pose of producing or inducing a chemical or physical change in the product
 7        or for removing impurities from the product or otherwise placing the prod-
 8        uct in a more marketable condition as part of an  operation  described  in
 9        subsection  (a)(2)  of  this  section, and chemicals and equipment used in
10        clean-in-place systems in  the  food  processing  and  food  manufacturing
11        industries.
12        (4)  Safety equipment and supplies required to meet a safety standard of a
13        state  or  federal agency when such safety equipment and supplies are used
14        as part of an operation described in subsection (a)(2) of this section.
15        (5)  Plants to be used as part of a farming operation.
16        (b)  Other than as provided in subsection (c) of this section, the  exemp-
17    tions  allowed  in  subsections  (a)(1),  (2), (3) and (4) of this section are
18    available only to a business or separately  operated  segment  of  a  business
19    which  is primarily devoted to producing tangible personal property which that
20    business will sell and which is intended for ultimate sale at retail within or
21    without this state. A contractor providing services to a business entitled  to
22    an  exemption  under  this  section  is  not  exempt as to any property owned,
23    leased, rented or used by it unless, as a result of the terms of the contract,
24    the use of the property is exempt under section 63-3615(b), Idaho Code.
25        (c)  The exemptions allowed in  subsections  (a)(1),  (a)(2),  (a)(3)  and
26    (a)(4)  of  this  section shall also be available to a business, or separately
27    operated segment of a business, engaged in farming or  mining,  whether  as  a
28    subcontractor,  contractor, contractee or subcontractee, when such business or
29    segment of a business is primarily  devoted  to  producing  tangible  personal
30    property  which is intended for ultimate sale at retail within or without this
31    state, without regard to the ownership of the product being produced.
32        (d)  As used in this section, the term "directly used or  consumed  in  or
33    during"  a  farming  operation  means the performance of a function reasonably
34    necessary to the operation of  the  total  farming  business,  including,  the
35    planting,  growing, harvesting and initial storage of crops and other agricul-
36    tural products and movement of crops and produce from the place of harvest  to
37    the  place  of  initial  storage.  It includes disinfectants used in the dairy
38    industry to clean cow udders or to clean pipes, vats or other  milking  equip-
39    ment.
40        (e)  The  exemptions  allowed  in  this  section do not include machinery,
41    equipment, materials and supplies  or service   used  in  a  manner
42    that  is incidental  to the manufacturing, processing, mining, farming or fab-
43    ricating operations such as maintenance and janitorial equipment and supplies.
44        (f)  Without regard to the use of such property,  this  section  does  not
45    exempt:
46        (1)  Hand  tools  with  a unit purchase price not in excess of one hundred
47        dollars ($100). A hand tool is an instrument used or worked by hand.
48        (2)  Tangible personal property  or service  used in any activ-
49        ities other than the actual manufacturing, processing, mining, farming  or
50        fabricating  operations  such as office equipment and supplies, and equip-
51        ment and supplies used in selling or distributing activities.
52        (3)  Property  or service  used in research or development.
53        (4)  Property  or service  used in transportation activities.
54        (5)  Machinery, equipment, tools or other property  or service 
55        used  to make repairs. This subsection does not include repair parts  that


                                          16

 1        become  a  component  part of tangible property exempt from tax under this
 2        section or lubricants, hydraulic oil, or coolants used in the operation of
 3        tangible personal property exempt under this section.
 4        (6)  Machinery, equipment, tools or other property  or service 
 5        used  to manufacture, fabricate, assemble  or  install  tangible  personal
 6        property which is:
 7             (i)   Not held for resale in the regular course of business; and
 8             (ii)  Owned by the manufacturer, processor, miner, farmer or   fabri-
 9             cator;  provided, however, this subsection does not prevent exemption
10             of machinery, equipment, tools or other  property    or  service
11               exempted  from  tax under subsection (a)(2) or (a)(3) of this
12             section.
13        (7)  Any improvement to real property or fixture thereto or  any  tangible
14        personal  property  which  becomes or is intended to become a component of
15        any real property or any improvement or fixture thereto   or  service
16        related thereto .
17        (8)  Motor  vehicles  licensed  or  required to be licensed by the laws of
18        this state or another state or any aircraft.
19        (9)  Tangible personal property  or service  used  or  consumed
20        in   processing,  producing  or  fabricating  tangible  personal  property
21        exempted from tax under this chapter in sections  63-3622F,  63-3622G  and
22        63-3622I, Idaho Code.
23        (10) Tangible  personal  property  described  in  section 63-3622HH, Idaho
24        Code.
25        (g)  Any tangible personal property exempt under this section which ceases
26    to qualify for this exemption, and does not qualify for any other exemption or
27    exclusion of the taxes imposed by this chapter, shall be subject  to  use  tax
28    based  upon its value at the time it ceases to qualify for exemption. Any tan-
29    gible personal property taxed under this chapter  which  later  qualifies  for
30    this exemption shall not entitle the owner of it to any claim for refund.

31        SECTION 14.  That Section 63-3622K, Idaho Code, be, and the same is hereby
32    amended to read as follows:

33        63-3622K.  OCCASIONAL SALES. (a) There are exempted from the taxes imposed
34    by  this chapter occasional sales  of tangible personal property  or ser-
35    vice .
36        (b)  As used in this section, the term "occasional sale" means:
37        (1)  A sale of property  or service  not held or used by a per-
38        son in the course of an activity for  which  he  is  required  to  hold  a
39        seller's  permit,  provided  such sale is not one (1) of a series of sales
40        sufficient in number or of such a nature as to  constitute  the  seller  a
41        "retailer" under section 63-3610(c), Idaho Code.
42        (2)  Any transfer of all or substantially all of the property held or used
43        by  a  person  in  a business requiring a seller's permit when, after such
44        transfer, the real or ultimate ownership of such property is substantially
45        similar to that which existed before such transfer.  For  the  purpose  of
46        this  section, stockholders, bondholders, partners, or other persons hold-
47        ing an interest in a corporation or other entity are regarded as having  a
48        "real  or ultimate ownership" of the property of such corporation or other
49        entity.
50        (3)  A transfer of capital assets to or by a business when the transfer is
51        accomplished through an adjustment of the beneficial interest of the busi-
52        ness and the transferor has paid sales or use taxes  pursuant  to  section
53        63-3619 or 63-3621, Idaho Code, on the capital assets, incidental to:


                                          17

 1             (i)   A  division of joint venture, partnership, or limited liability
 2             company assets among the members or partners in exchange for  a  pro-
 3             portional  reduction  of  the transferee's interest in the joint ven-
 4             ture, partnership, or limited liability company. For the purposes  of
 5             this  section,  the term "limited liability company" means a business
 6             organization as defined in chapter 6, title 53, Idaho Code;
 7             (ii)  The formation of a partnership, joint venture, or limited  lia-
 8             bility  company  by  the transfer of assets to the partnership, joint
 9             venture, or limited liability company or transfers to a  partnership,
10             joint  venture,  or limited liability company in exchange for propor-
11             tionate interests in the partnership, joint venture, or limited  lia-
12             bility company;
13             (iii) The  formation of a corporation by the owners of a business and
14             the transfer of their business assets to the corporation in  exchange
15             for stock in proportion to assets contributed;
16             (iv)  The transfer of assets of shareholders in the formation or dis-
17             solution of a corporation;
18             (v)   The  transfer  of capital assets by a corporation to its stock-
19             holders in exchange for surrender of capital stock;
20             (vi)  The transfer of assets from a parent corporation to  a  subsid-
21             iary corporation which is owned at least eighty  per cent 
22               percent  (80%) by the parent corporation, which transfer
23             is solely in exchange for stock or securities of the subsidiary  cor-
24             poration;
25             (vii) The  transfer  of assets from a subsidiary corporation which is
26             owned at least eighty  per  cent      percent  
27             (80%)  by  the  parent corporation to a parent corporation or another
28             subsidiary which is owned at least eighty  per cent  
29             percent  (80%) by the parent  corporation,  which  transfer  is
30             solely  in exchange for stock or securities of the parent corporation
31             or the subsidiary which received the assets.
32        (4)  The sale, lease or rental of a capital  asset  in  substantially  the
33        same form as acquired by the transferor and on which the initial transfer-
34        or  has  paid  sales  or use taxes pursuant to section 63-3619 or 63-3621,
35        Idaho Code, when the owners of all of the  outstanding  stock,  equity  or
36        interest  of  the transferor are the same as the transferee or are members
37        of the same family within the second degree of consanguinity or affinity.
38        (5)  The sale of substantially all of the operating assets of  a  business
39        or  of a separate division, branch, or identifiable segment to a buyer who
40        continues operation of the business. For the purpose of this subsection, a
41        "separate division, branch, or identifiable segment" shall  be  deemed  to
42        exist  if,  prior to its sale, the income and expense attributable to such
43        "separate division, branch, or identifiable segment" could  be  separately
44        ascertained from the books of accounts and records.
45        (6)  Sales  by  persons  who  are  not  defined  as "retailers" in section
46        63-3610, Idaho Code.
47        (7)  Sales of animals by any 4-H club or FFA club held in conjunction with
48        a fair or the western Idaho spring lamb sale.
49        (8)  The sale or purchase of  tangible  personal  property  at  home  yard
50        sales;  provided  however,  that no more than two (2) such home yard sales
51        per individual calendar year shall be exempt.
52        (c)  As used in this section, the term "occasional sale," when applied  to
53    the sale of a self-propelled motor vehicle, means only:
54        (1)  Sales  of  motor  vehicles between members of a family related within
55        the second degree of consanguinity, unless a sales  or  use  tax  was  not


                                          18

 1        imposed  on  the  sale  of  that motor vehicle at the time of purchase, in
 2        which situation the sale is taxable.
 3        (2)  Sales of motor vehicles that fall within the scope  of  the  transac-
 4        tions detailed in subsection (b)(2) through (b)(5) of this section.
 5        (d)  The exemption provided by subsection (b)(1), (b)(4), (b)(6) or (b)(8)
 6    of  this  section shall not apply to the sale, purchase or use of aircraft, as
 7    defined in section 21-201, Idaho Code, nor shall it apply to  the  sale,  pur-
 8    chase  or  use of boats or vessels, as defined in section 67-7003, Idaho Code,
 9    nor shall it apply to the sale, purchase or use of  snowmobiles,  recreational
10    vehicles  or  off-highway  motorbikes,  as defined in section 63-3622HH, Idaho
11    Code.
12        SECTION 15.  That Section 63-3622S, Idaho Code, be, and the same is hereby
13    amended to read as follows:

14        63-3622S.  RADIO  AND  TELEVISION  BROADCASTING  EQUIPMENT.    There   are
15    exempted  from the taxes imposed by this chapter receipts from the sale, stor-
16    age, use or other consumption in this  state  of  tangible  personal  property
17      or  service    directly  used  and consumed in the production and
18    broadcasting of radio and television programs when the purchase, storage,  use
19    or  other  consumption is by a business or segment of a business which is pri-
20    marily devoted to such production and broadcasting, provided, that the use  or
21    consumption  of  such  tangible personal property is necessary or essential to
22    the performance of such operation. This exemption does not include  machinery,
23    equipment,  materials  and  supplies  or service  used  in a manner
24    that is incidental to the production and broadcasting operation, such as main-
25    tenance and janitorial equipment and supplies and hand tools with a unit price
26    not in excess of one hundred dollars ($100); nor does it include tangible per-
27    sonal property  or service  used   in  any  activities  other  than
28    actual production and broadcasting operation such as office equipment and sup-
29    plies,  equipment and supplies used in selling and distributing activities, in
30    research, or in transportation activities; nor shall  this  exemption  include
31    motor  vehicles or aircraft required to be licensed by the laws of this state,
32    without regard to the use to which such motor vehicles or aircraft are put.

33        SECTION 16.  That Section 63-3622T, Idaho Code, be, and the same is hereby
34    amended to read as follows:

35        63-3622T.  EQUIPMENT TO PRODUCE CERTAIN  NEWSPAPERS.  There  are  exempted
36    from the taxes imposed by this chapter:
37        (a)  Receipts  from  the  sale,  storage, use or other consumption in this
38    state of tangible personal property  or service  directly used  and
39    consumed  in  the  production  of publications in a newspaper format which are
40    distributed to the public at large and which rely on  advertising  revenue  as
41    their  primary  source of income; provided, that the purchase, storage, use or
42    other consumption is by a business or segment of a business which is primarily
43    devoted to such production of said publications; provided, further,  that  the
44    use  or  consumption of such tangible personal property is necessary or essen-
45    tial to the performance of such publication business. This exemption does  not
46    include  machinery,  equipment, materials and supplies  or service 
47    used in a manner that is incidental to the production  of  said  publications,
48    such  as maintenance and janitorial equipment and supplies and hand tools with
49    a unit price not in excess of one hundred dollars ($100); nor does it  include
50    tangible  personal  property    or  service  used in any activities
51    other than the actual production of the  publication  and  shall  not  include
52    property such as office equipment and supplies, equipment and supplies used in


                                          19

 1    selling  and distributing activities, in research or in transportation activi-
 2    ties; nor shall this exemption include motor vehicles or aircraft required  to
 3    be  licensed by the laws of this state without regard to the use to which such
 4    motor vehicles or aircraft are put.
 5        (b)  Provided, further, that this exemption shall apply when the  publica-
 6    tion referred to herein is distributed to the public free of charge.
 7        (c)  Provided,  further, that in order for the exemption to be applicable,
 8    at least ten percent (10%) of the total publication, computed  on  an  average
 9    annual column inch basis, must be devoted to the publication of nonincome pro-
10    ducing informative material.

11        SECTION 17.  That Section 63-3622U, Idaho Code, be, and the same is hereby
12    amended to read as follows:

13        63-3622U.  FUNERAL  SERVICES.  There is exempted from the taxes imposed by
14    this chapter the sale of tangible personal property   or  service  
15    relating to funeral services by a licensed funeral establishment.

16        SECTION  18.  That  Section  63-3622BB,  Idaho  Code,  be, and the same is
17    hereby amended to read as follows:

18        63-3622BB.  RESEARCH AND DEVELOPMENT AT THE INE E L.  There  is
19    exempted from the taxes imposed by this chapter, the sale or use of that prop-
20    erty  or service  primarily or directly used or consumed in connec-
21    tion  with  research,  development,  experimental and testing activities, when
22    exclusively financed by  the  United  States  in  connection  with  the  Idaho
23    national engineering  and environmental  laboratory.

24        SECTION  19.  That  Section  63-3622JJ,  Idaho  Code,  be, and the same is
25    hereby amended to read as follows:

26        63-3622JJ.  LOGGING EXEMPTION. There are exempted from the  taxes  imposed
27    by this chapter:
28        (1)  The  sale  at retail, storage, use or other consumption in this state
29    of tangible personal property  or service  which is  primarily  and
30    directly  used  or  consumed   in  logging  including,  but  not  limited  to,
31    logloaders,  log  jammers,  log skidders and fuel used in logging trucks, pro-
32    vided that the use or consumption of such tangible personal property is neces-
33    sary or essential to logging.
34        (2)  The exemption allowed by subsection (1)  of  this  section  does  not
35    include  machinery,  equipment, materials and supplies  or service 
36    used in a manner that is incidental to logging such as maintenance and janito-
37    rial equipment and supplies, and hand tools with a unit purchase price not  in
38    excess  of  one  hundred dollars ($100); nor does it include tangible personal
39    property  or service  used in any activities other than the  actual
40    logging,  such  as office equipment and supplies, equipment and supplies  used
41    in selling or distributing activities, in research, or, except for  fuel  used
42    in  logging  trucks,  in  transportation  activities; nor shall this exemption
43    include motor vehicles or aircraft licensed or required to be licensed by  the
44    laws  of this state, without regard to the use to which such motor vehicles or
45    aircraft are put; nor shall this exemption  apply  to  vehicles  or  equipment
46    described  in  section 63-3622HH, Idaho Code; nor shall this exemption include
47    tangible personal property used to produce tangible personal property exempted
48    from the tax under this chapter by section 63-3622G, Idaho Code.


                                          20

 1        SECTION 20.  That Section 63-3624, Idaho Code, be, and the same is  hereby
 2    amended to read as follows:

 3        63-3624.  ADMINISTRATION.  (a)  The state tax commission shall enforce the
 4    provisions of this act and may prescribe, adopt, and enforce rules relating to
 5    the administration and enforcement of this act. The state tax  commission  may
 6    prescribe  the  extent  to which any rule shall be applied without retroactive
 7    effect.
 8        (b)  The state tax commission shall employ qualified auditors for examina-
 9    tion of taxpayers' records and books. The  state  tax  commission  shall  also
10    employ  such   accountants,  investigators,  regional supervisors, assistants,
11    clerks, and other personnel as are necessary for the efficient  administration
12    of  this  act,  and  may  delegate authority to its representatives to conduct
13    hearings, or perform any other duties imposed by this act.
14        (c)  Every seller, every retailer, and every  person  storing,  using,  or
15    otherwise  consuming in this state tangible personal property  or service
16     purchased from a retailer shall keep such records,  receipts,  invoices
17    and other pertinent papers as the state tax commission may require. Every such
18    seller, retailer or person who files the returns required under this act shall
19    keep  such  records  for  not less than four (4) years from the making of such
20    records unless the state tax commission in  writing  sooner  authorizes  their
21    destruction.
22        (d)  Retail  food  stores  may  petition to the state tax commission to be
23    relieved from the responsibility of retaining detailed  invoices  of  nontaxed
24    sales  for  which the documentation required in section s  63-3620,
25    63-3621 ,  or 63-3622, Idaho  Code,  and  any  other  documentation
26    which  may  be  required by the tax commission, has been obtained by the store
27    from the purchaser. The tax commission shall  review  each  petition  and  may
28    examine  the  books  and records of the petitioner to insure that the products
29    sold by the petitioner are those sold by a retail food store. The tax  commis-
30    sion  shall give written notice of its determination to the petitioner as soon
31    as practicable after receiving the written request, but in no event later than
32    sixty (60) days after receiving the petition. As used in this section, "retail
33    food stores" shall mean those retail stores primarily engaged in selling  food
34    for  home preparation and consumption described in major group 54 of the stan-
35    dard industrial classification manual (SIC) of 1987, as amended, published  by
36    the  office  of management and budget of the executive office of the president
37    of the United States.
38        (e)  The state tax commission, or any person authorized in writing by  it,
39    may  examine  the  books, papers, records, and equipment of any person selling
40    tangible personal property  or service  and any person  liable  for
41    the use tax and may investigate the character of the business of the person in
42    order  to  verify the accuracy of any return made, or, if no return is made by
43    the person, to ascertain and determine the amount required to be paid.
44        (f)  Purchasers claiming exemption from tax and retailers whose  pertinent
45    records  are  kept  outside  of  the state must bring the records to Idaho for
46    examination by the state tax commission upon request of  the  latter,  or,  by
47    agreement  with  the state tax commission, permit an auditor designated by the
48    state tax commission to visit the place where the records are kept, and  there
49    audit such records.
50        (g)  In  the  administration  of the use tax, the state tax commission may
51    require the filing of reports by any person or class of persons having in  his
52    or  their possession or custody information relating to sales of tangible per-
53    sonal property  or service  the storage, use, or other  consumption
54    of  which is subject to the tax. The reports shall be filed when the state tax


                                          21

 1    commission requires and shall set forth the names and addresses of  purchasers
 2    of  tangible  personal property  or service , the sale price of the
 3    property, the date of sale, and such other information as the state  tax  com-
 4    mission may require.
 5        (h)  When  the  tax commission determines that a retail sale is not exempt
 6    and the purchaser has failed to voluntarily pay sales or use tax in regard  to
 7    the  property  or services purchased, the tax commission may collect the sales
 8    tax which was due at the time of the sale or the use tax due  at the  time  of
 9    storage,  use or other consumption of the taxable goods or services by issuing
10    to the purchaser a notice of deficiency determination, asserting tax  together
11    with  interest,  at  the rate provided in section 63-3045, Idaho Code, and may
12    assert penalties found elsewhere in this chapter.
13        (i)  If the tax commission determines that the purchaser has repeatedly or
14    intentionally made purchases claimed to be exempt that are not exempt, and the
15    purchaser has failed to voluntarily report and pay use tax in regard to  those
16    purchases,  or  the commission determines that the purchaser has repeatedly or
17    intentionally made purchases claimed to be exempt that are not exempt and  has
18    removed  the  goods from this state, the commission may assert a penalty equal
19    to five percent (5%) of the sales price  of  the  property    or  service
20     or two hundred dollars ($200), whichever is greater. The tax commission
21    may  abate  the penalty when the purchaser establishes during a proceeding for
22    redetermination that there were reasonable grounds for believing that the pur-
23    chase was properly exempt from tax.

24        SECTION 21.  That Section 63-3638, Idaho Code, be, and the same is  hereby
25    amended to read as follows:

26        63-3638.  SALES TAX -- DISTRIBUTION. All moneys collected under this chap-
27    ter, except as may otherwise be required in section 63-3203, Idaho Code, shall
28    be distributed by the tax commission as follows:
29        (a)  An  amount  of money shall be distributed to the state refund account
30    sufficient  to pay current refund claims. All refunds  authorized  under  this
31    chapter  by the commission shall be paid through the state refund account, and
32    those moneys are continuously appropriated.
33        (b)  Five hundred thousand dollars ($500,000)  per  year  is  continuously
34    appropriated  and shall be distributed to the permanent building account, pro-
35    vided by section 57-1108, Idaho Code.
36        (c)  Four million eight hundred thousand dollars ($4,800,000) per year  is
37    continuously appropriated and shall be distributed to the water pollution con-
38    trol account established by section 39-3605, Idaho Code.
39        (d)  (1) An amount equal to the sum required to be certified by the chair-
40        man of the  Idaho housing and finance association to the state tax commis-
41        sion pursuant to section 67-6211, Idaho Code, in each year is continuously
42        appropriated and shall be paid to any capital reserve fund, established by
43        the  Idaho  housing  and  finance association pursuant to section 67-6211,
44        Idaho Code. Such amounts, if any, as may be appropriated hereunder to  the
45        capital reserve fund of the Idaho housing and finance association shall be
46        repaid  for  distribution under the provisions of this section, subject to
47        the provisions of section 67-6215, Idaho Code, by the  Idaho  housing  and
48        finance association, as soon as possible, from any moneys available there-
49        for  and  in  excess  of the amounts which the association determines will
50        keep it self-supporting.
51        (2)  An amount equal to the sum required  by  the  provisions  of  section
52        63-709, Idaho Code, is continuously appropriated and shall be paid as pro-
53        vided by section 63-709, Idaho Code.


                                          22

 1         (3)  An amount required by the provisions of section 33-1002D, Idaho
 2        Code. 
 3        (e)    Six  per cent   Five and twenty-one hundredths per-
 4    cent  ( 6  5.21  %)  is  hereby  appropriated  and
 5    shall  be  paid to the county treasurer of each county in amounts to be deter-
 6    mined as follows:
 7        (1)  Each taxing district other than school districts shall be entitled to
 8        a base share of sales tax moneys equal to the amount distributed  to  that
 9        district  for  the  fourth calendar quarter of 1979. The computation shall
10        not include any distributions made to the  credit  of  either  the  former
11        county school levy or the state water pollution control levy. The percent-
12        age  so  determined for each taxing district shall be applied each quarter
13        to the above percentage of sales tax. The resulting sums shall be paid  to
14        the  county  treasurer of each county for distribution to each taxing dis-
15        trict, except school districts, which received sales tax moneys  in  1979.
16        Whenever a taxing district is dissolved, the dissolved district's share of
17        sales  moneys shall be credited continuously to the county current expense
18        fund.
19        (2)  Whenever the amount of nonschool district sales tax  moneys  distrib-
20        uted exceeds in any quarter the total amount of moneys distributed to non-
21        school  districts for the base quarter, which is the fourth calendar quar-
22        ter of 1979, by ten  per cent   percent   (10%),  or
23        more, the excess of the base quarter shall be paid to the county treasurer
24        of  each  county  for  distribution to each taxing district in the county,
25        except school districts, in the following manner.
26             The state tax commission shall compute the percentage that the  aver-
27        age  amount  of  taxes collected from assessments for the years 1965, 1966
28        and 1967 on the personal property described as business inventory in  sub-
29        sections (1) and (2) of section 63-602W, Idaho Code, for each county bears
30        to  the  average total amount of taxes collected from assessments for said
31        years on the personal property described as business inventory in  subsec-
32        tions  (1) and (2) of section 63-602W, Idaho Code, for all counties in the
33        state. The percentage so determined for each county shall  be  applied  to
34        the  sales  tax    distributed under this subsection and the resulting sum
35        shall be paid to the county treasurer of each county for  distribution  to
36        each taxing district, except school districts, in the county as follows:
37             (i)   Each  year  the  county commissioners in each county shall take
38             the tax charge, applicable to the current property roll equalized  by
39             county commissioners sitting as a board of equalization, of each tax-
40             ing  district  within the county, except school districts, and divide
41             it by the total current tax charges applicable to the  current  prop-
42             erty  roll  of  all taxing districts, except school districts, within
43             said county and the resulting percentages shall  be  applied  to  the
44             county's  proportionate  share  of  said  sales  tax  account and the
45             resulting amount shall be distributed to each taxing district in  the
46             county  periodically  but  not  less frequently than quarterly by the
47             county auditor and applied by such taxing districts in the same  man-
48             ner and in the same proportions as revenues from property taxation.
49             (ii)  The  moneys  set aside and appropriated to the county treasurer
50             out of the sales tax account above may be considered by the  counties
51             and  other taxing districts and budgeted against at the same time, in
52             the same manner and in the same year as revenues from taxation on all
53             classes of personal property which these moneys replace.
54        (3)  All moneys distributed pursuant to subsection (e) shall be subject to
55        the redistribution provisions of section 40-801, Idaho Code, where  appli-


                                          23

 1        cable.
 2        (f)  One  dollar ($1.00) on each application for certificate of title to a
 3    motor vehicle, or initial application for registration processed by the county
 4    assessor or the Idaho transportation department excepting  those  applications
 5    in  which  any  sales  or  use  taxes  due have been previously collected by a
 6    retailer, shall be a fee for the services of the assessor of the county or the
 7    Idaho transportation department in collecting such taxes, and  shall  be  paid
 8    into  the  current  expense fund of the county or state highway account estab-
 9    lished in section 40-702, Idaho Code.
10        (g)   Seven and three-quarters per cent   Six and seventy-
11    three hundredths percent  ( 7.75  6.73 %) is  con-
12    tinuously appropriated and shall be distributed to the revenue sharing account
13    which  is  created  in the state operating fund, and the moneys in the revenue
14    sharing account will be paid by the tax commission as follows:
15        (1)  One-half (1/2) shall be paid to the various cities as follows:
16             (i)   Fifty  per cent   percent  (50%) of  such
17             amount  shall  be  paid to the various cities, and each city shall be
18             entitled to an amount in the proportion that the population  of  that
19             city bears to the population of all cities within the state; and
20             (ii)  Fifty   per cent   percent  (50%) of such
21             amount shall be paid to the various cities, and each  city  shall  be
22             entitled  to  an  amount  in the proportion that the preceding year's
23             market value for assessment purposes for that city bears to the  pre-
24             ceding  year's  market  value  for assessment purposes for all cities
25             within the state.
26        (2)  One-half (1/2) shall be paid to the state's general account or to the
27        various counties as follows:
28             (i)   One million three hundred twenty thousand dollars  ($1,320,000)
29             shall  be  distributed one forty-fourth (1/44) to each of the various
30             counties; and
31             (ii)  The balance of such amount shall be paid to the  various  coun-
32             ties,  and  each county shall be entitled to an amount in the propor-
33             tion that the population of that county bears to  the  population  of
34             the state.
35        (h)    For fiscal year 1998-99, one hundred sixty-two million dollars
36    ($162,000,000) shall be paid to the state department of education for  distri-
37    bution  to  school districts as calculated by section 33-1002, Idaho Code. The
38    state tax commission shall deposit the money into  the  public  school  income
39    fund  in  five  (5) equal payments on dates provided in section 33-1009, 1.a.,
40    Idaho Code.
41        (i)   Any moneys remaining over and above those  necessary  to  meet
42    and reserve for payments under other subsections of this section shall be dis-
43    tributed to the general account.

44        SECTION  22.  An  emergency  existing  therefor, which emergency is hereby
45    declared to exist, Sections 1, 2 and 3 of this act shall be in full force  and
46    effect retroactively to January 1, 1998; and Sections 4 through 20 of this act
47    shall be in full force and effect on and after June 1, 1998.

Statement of Purpose / Fiscal Impact

    





                          STATEMENT OF PURPOSE
    
      RS07 660
    
    This legislation addresses the public concern for property tax 
    relief for funding Public School Maintenance and Operations. The 
    bill implements a more equalized and broad-based tax structure by 
    reducing the school district M & O portion paid out of personal 
    property tax to only a fourth of its original assessment. This 
    equalization is achieved by shifting the property tax reduction 
    to the amount of sales tax on goods and selected services. There 
    is no change in the income tax rate.
    
         With this bill, there is a reduction in the M & O portion 
    supported by property tax from 0.03 to 0.01 percent of the local 
    district's contribution beginning with fiscal year 1999. Through 
    the 1995 passage of HB 156, approximately one-fourth of schools M 
    & O costs were essentially derived from the state's sales taxes. 
    To support an additional one-quarter of the M & O from sales tax 
    revenue, this bill will increase the sales tax by .5%; bringing 
    the total sales tax support for school M & O to 50%.
    
       A corresponding 5.5% tax on services is invoked for repairs 
    on tangible personal property and on personal and other 
    miscellaneous services. This provides the final one-quarter of 
    funding required for school M & O. The result is revenue neutral 
    through the tax shift from property tax to the commodity sales and 
    service sector. In total systems terms this is a tax restructuring 
    which does not represent an overall tax increase, but in fact, 
    over time will lead to a net tax reduction for our citizens.
    
                               FISCAL NOTE
    
    As this legislation is revenue neutral, there will be an increase 
    in the state's sales tax on goods and services for distribution as 
    property tax relief. This is through a shift of approximately 104 
    million dollars from property tax to sales and service taxes. Its 
    effect on the school support formula should remain revenue stable. 
    The net result to home-owner citizens is an equivalent property 
    tax relief.
    
    CONTACT: Representative Maynard Miller
             208-332-1000
    
    STATEMENT OF PURPOSE/FISCAL NOTE
    
    Bill No.H 590