03/22/2002 09:20 AM House FIN

HOUSE BILL NO. 229                                                                                                            
                                                                                                                                
     "An Act imposing a tax on employment; and providing for                                                                    
     an effective date."                                                                                                        
                                                                                                                                
Co-Chair  Mulder  stated that  it  would be  appropriate  for                                                                   
Representative Croft  to add his name to the  legislation and                                                                   
allow   Representative   Stevens   to  withdraw   his   name.                                                                   
Representative Croft agreed.                                                                                                    
                                                                                                                                
Representative   Croft   provided   members   with   proposed                                                                   
committee substitute,  work draft 22-LS0842\L,  2/22/02 (copy                                                                   
on file).  He explained that  the committee substitute  would                                                                   
provide  the income  tax  recommended  by the  fiscal  policy                                                                   
caucus, an  alcohol tax  at 10-cents a  drink, a  cruise ship                                                                   
head tax and a motor fuel tax.                                                                                                  
                                                                                                                                
Representative Croft MOVED to  AMENDED the proposed committee                                                                   
substitute  by removing the  cruise head  tax portion  of the                                                                   
bill. There being NO OBJECTION, it was so ordered.                                                                              
                                                                                                                                
Co-Chair  Mulder indicated  that the  original sponsor  would                                                                   
like to  remove their name  from the legislation  as amended.                                                                   
Representative  Croft  stated  that  he  would  takeover  the                                                                   
sponsorship of the legislation  in whatever manner was deemed                                                                   
appropriate.                                                                                                                    
                                                                                                                                
Representative Croft spoke in  support of the legislation. He                                                                   
explained that the  legislation as amended would  provide a 4                                                                   
percent of taxable  income tax. The proposal  is a compromise                                                                   
between  a flat tax  and a  more progressive  tax based  on a                                                                   
portion of  tax liability. A  taxable income tax  would allow                                                                   
deductions.  The motor  fuel tax  portion of  the bill  would                                                                   
allow a mechanism to fund deferred maintenance.                                                                                 
                                                                                                                                
Representative  Hudson   requested  that  a   spreadsheet  be                                                                   
created to show  the approximate amounts to be  earned by the                                                                   
different elements. Representative  Whitaker pointed out that                                                                   
a new fiscal note would be appropriate.                                                                                         
                                                                                                                                
Co-Chair Mulder  explained that the  intent would be  to take                                                                   
action on the legislation on Monday after review.                                                                               
                                                                                                                                
Representative  Harris MOVED to  AMEND on  page 12,  line 11:                                                                   
increase existing taxes on alcohol by 50 percent.                                                                               
                                                                                                                                
Representative  Croft OBJECTED.  He observed  that under  the                                                                   
committee  substitute  the  alcohol  tax  increase  would  be                                                                   
approximately  .10 cents  a drink. A  fifty percent  increase                                                                   
would only  increase the tax by  about a cent and a  half per                                                                   
drink. He  noted that the  tax has not  been increased  for a                                                                   
long time  and would not come  close to addressing  the needs                                                                   
of the state.                                                                                                                   
                                                                                                                                
Co-Chair  Mulder clarified  that  there would  be 50  percent                                                                   
increase over the current taxation in all three categories.                                                                     
                                                                                                                                
Representative  John  Davies  reiterated  that  the  increase                                                                   
would be less than .02 cents a drink.                                                                                           
                                                                                                                                
Representative Croft stressed  that most items have increased                                                                   
beyond 50 percent since 1960.  The increase beginning in 2002                                                                   
would not come near to the pre inflation cost.                                                                                  
                                                                                                                                
Representative  Harris  WITHDREW  his  motion  to  amend  the                                                                   
alcohol tax to 50 percent.                                                                                                      
                                                                                                                                
HB  229  was   heard  and  HELD  in  Committee   for  further                                                                   
consideration.