SENATE FILE 507

BY  DEARDEN

A BILL FOR

An Act relating to the natural resources and outdoor recreation trust fund by increasing the sales and use tax rates and including effective date provisions.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

   Section 1.  Section 423.2, subsection 1, unnumbered paragraph 1, Code 2011, is amended to read as follows:
   There is imposed a tax of six and three-eighths percent upon the sales price of all sales of tangible personal property, consisting of goods, wares, or merchandise, sold at retail in the state to consumers or users except as otherwise provided in this subchapter.
   Sec. 2.  Section 423.2, subsection 2, Code 2011, is amended to read as follows:
   2.  A tax of six and three-eighths percent is imposed upon the sales price of the sale or furnishing of gas, electricity, water, heat, pay television service, and communication service, including the sales price from such sales by any municipal corporation or joint water utility furnishing gas, electricity, water, heat, pay television service, and communication service to the public in its proprietary capacity, except as otherwise provided in this subchapter, when sold at retail in the state to consumers or users.
   Sec. 3.  Section 423.2, subsection 3, Code 2011, is amended to read as follows:
   3.  A tax of six and three-eighths percent is imposed upon the sales price of all sales of tickets or admissions to places of amusement, fairs, and athletic events except those of elementary and secondary educational institutions. A tax of six and three-eighths percent is imposed on the sales price of an entry fee or like charge imposed solely for the privilege of participating in an activity at a place of amusement, fair, or athletic event unless the sales price of tickets or admissions charges for observing the same activity are taxable under this subchapter. A tax of six and three-eighths percent is imposed upon that part of private club membership fees or charges paid for the privilege of participating in any athletic sports provided club members.
   Sec. 4.  Section 423.2, subsection 4, paragraph a, Code 2011, is amended to read as follows:
   a.  A tax of six and three-eighths percent is imposed upon the sales price derived from the operation of all forms of amusement devices and games of skill, games of chance, raffles, and bingo games as defined in chapter 99B, and card game tournaments conducted under section 99B.7B, that are operated or conducted within the state, the tax to be collected from the operator in the same manner as for the collection of taxes upon the sales price of tickets or admission as provided in this section. Nothing in this subsection shall legalize any games of skill or chance or slot-operated devices which are now prohibited by law.
   Sec. 5.  Section 423.2, subsection 5, Code 2011, is amended to read as follows:
   5.  There is imposed a tax of six and three-eighths percent upon the sales price from the furnishing of services as defined in section 423.1.
   Sec. 6.  Section 423.2, subsection 7, paragraph a, unnumbered paragraph 1, Code 2011, is amended to read as follows:
   A tax of six and three-eighths percent is imposed upon the sales price from the sales, furnishing, or service of solid waste collection and disposal service.
   Sec. 7.  Section 423.2, subsection 8, paragraph a, Code 2011, is amended to read as follows:
   a.  A tax of six and three-eighths percent is imposed on the sales price from sales of bundled transactions. For the purposes of this subsection, a“bundled transaction” is the retail sale of two or more distinct and identifiable products, except real property and services to real property, which are sold for one nonitemized price. A“bundled transaction”does not include the sale of any products in which the sales price varies, or is negotiable, based on the selection by the purchaser of the products included in the transaction.
   Sec. 8.  Section 423.2, subsection 9, Code 2011, is amended to read as follows:
   9.  A tax of six and three-eighths percent is imposed upon the sales price from any mobile telecommunications service which this state is allowed to tax by the provisions of the federal Mobile Telecommunications Sourcing Act, Pub. L. No. 106-252, 4 U.S.C. § 116 et seq. For purposes of this subsection, taxes on mobile telecommunications service, as defined under the federal Mobile Telecommunications Sourcing Act that are deemed to be provided by the customer’s home service provider, shall be paid to the taxing jurisdiction whose territorial limits encompass the customer’s place of primary use, regardless of where the mobile telecommunications service originates, terminates, or passes through and shall in all other respects be taxed in conformity with the federal Mobile Telecommunications Sourcing Act. All other provisions of the federal Mobile Telecommunications Sourcing Act are adopted by the state of Iowa and incorporated into this subsection by reference. With respect to mobile telecommunications service under the federal Mobile Telecommunications Sourcing Act, the director shall, if requested, enter into agreements consistent with the provisions of the federal Act.
   Sec. 9.  Section 423.2, subsection 11, Code 2011, is amended by adding the following new paragraph:
   NEW PARAGRAPH.  c.  Subsequent to the deposit into the general fund of the state, the department shall transfer revenues equal to an amount generated by a tax of three-eighths of one percent imposed on the sale of tangible personal property and enumerated services as provided in this section to the natural resources and outdoor recreation trust fund created in section 461.31.
   Sec. 10.  Section 423.2, subsection 13, Code 2011, is amended to read as follows:
   13.  The sales tax rate of six and three-eighths percent is reduced to five and three-eighths percent on January 1, 2030.
   Sec. 11.  Section 423.5, unnumbered paragraph 1, Code 2011, is amended to read as follows:
   Except as provided in subsection 3, an excise tax at the rate of six and three-eighths percent of the purchase price or installed purchase price is imposed on the following:
   Sec. 12.  Section 423.5, subsection 9, Code 2011, is amended to read as follows:
   9.  The use tax rate of six percent is reduced to five and three-eighths percent on January 1, 2030.
   Sec. 13.  Section 423.43, subsection 1, Code 2011, is amended by adding the following new paragraph:
   NEW PARAGRAPH.  c.  Subsequent to the deposit into the general fund of the state, the department shall transfer revenues equal to an amount generated by a tax of three-eighths of one percent imposed on the use of property and enumerated services as provided in section 423.5 to the natural resources and outdoor recreation trust fund created in section 461.31.
   Sec. 14.  PURPOSE.  The purpose of this Act is to provide for the implementation of Article VII, section 10, of the Constitution of the State of Iowa by fully funding the natural resources and outdoor recreation trust fund as created in section 461.31, pursuant to Article VII, section 10, of the Constitution of the State of Iowa.
   Sec. 15.  EMERGENCY RULES.  The department of revenue shall adopt emergency rules under section 17A.4, subsection 3, and section 17A.5, subsection 2, paragraph “b”, to implement the provisions of this Act. The rules shall be effective immediately upon filing with the administrative rules coordinator unless a later date is specified in the rules, but not later than July 1, 2011. Any rules adopted in accordance with this section shall also be published as a notice of intended action as provided in section 17A.4.
   Sec. 16.  EFFECTIVE DATE.  The following provision or provisions of this Act take effect:
   1.  Except as provided in subsection 2, this Act takes effect on July 1, 2011.
   2.  The section of this Act requiring the department of revenue to adopt emergency rules, being deemed of immediate importance, takes effect upon enactment.
EXPLANATION
   This bill relates to the sales tax imposed on the sale of tangible personal property and the furnishing of enumerated services and to an amendment to the Constitution of the State of Iowa ratified on November 2, 2010, dedicating a portion of state revenue for purposes of benefiting natural resources, outdoor recreation, and soil conservation (Article VII, section 10).
   The constitutional amendment creates a natural resources and outdoor recreation trust fund within the state treasury. The fund and allocations from the fund are codified in Code chapter 461. Moneys in the fund cannot be used for any purpose other than protecting and enhancing water quality and natural areas in this state including parks, trails, and fish and wildlife habitat, and conserving agricultural soils in this state. No revenue is credited to the fund until the sales tax rate is increased. Whenever the rate is increased, the amount generated by the increase is credited to the fund, but the amount credited cannot exceed the amount that a rate of 3/8 of 1 percent would generate.
   Currently, the tax on sales and services in Iowa is imposed at the rate of 6 percent. This bill provides for an increase in the rate to 6 and 3/8 percent.
   The bill provides for the same increase to the use tax in order to comply with the streamlined sales and use tax agreement of which Iowa is a party. The revenues generated are deposited into the general fund of the state before being transferred to the natural resources and outdoor recreation trust fund. The increase does not affect those use taxes deposited into other statutory funds, including the road use tax fund.
   The bill requires that revenues generated by the sales tax increase also be deposited in the general fund of the state before being transferred to the natural resources and outdoor recreation trust fund.
   The bill takes effect on July 1, 2011, except for a provision requiring the department of revenue to adopt emergency rules which takes effect upon enactment.