S.F. 459 Section 1. NEW SECTION . 423G.1 Definitions. 1 1. For purposes of this chapter, “bottled water” means 2 carbonated or noncarbonated water that is placed in a sealed 3 bottle or other container for the purpose of sale to the public 4 for human consumption. “Bottled water” does not include soft 5 drinks as defined in section 423.3, subsection 57, paragraph 6 “g” . 7 2. All other words and phrases used in this chapter and 8 defined in section 423.1 have the meaning given them by section 9 423.1 for purposes of this chapter. 10 Sec. 2. NEW SECTION . 423G.2 Tax imposed. 11 1. A tax of six percent is imposed on the following: 12 a. The sales price of bottled water sold in the state of 13 Iowa. 14 b. The purchase price of bottled water used in the state of 15 Iowa. 16 2. This tax shall be collected and paid over to the 17 department by any retailer, retailer maintaining a place of 18 business in this state, or user who would be responsible for 19 collection and payment of the tax if it were a sales or use tax 20 imposed under chapter 423. 21 Sec. 3. NEW SECTION . 423G.3 Exemptions. 22 1. The sales price or purchase price from transactions 23 exempt from state sales tax under section 423.3, except section 24 423.3, subsections 57 and 58, is also exempt from the tax 25 imposed by this chapter. 26 2. There is exempted from the computation of the amount 27 of tax imposed on the use of bottled water in section 423G.2, 28 subsection 1, paragraph “b” , bottled water the sale of which 29 is required to be included in the measure of the tax imposed 30 on the sale of bottled water in section 423G.2, subsection 1, 31 paragraph “a” , if the tax has been paid to the department or 32 the retailer. 33 Sec. 4. NEW SECTION . 423G.4 Taxation in another state. 34 If any person who causes bottled water to be brought into 35 -1- LSB 2405XS (2) 87 mm/sc/rj 1/ 4

S.F. 459 this state or who uses bottled water in this state has already 1 paid a tax in another state in respect to the sale or use of 2 the bottled water, or an occupation tax in respect to the 3 bottled water, in an amount less than the tax imposed by this 4 chapter, the provisions of this chapter shall apply, but at a 5 rate measured by the difference only between the rate fixed by 6 this chapter and the rate by which the previous tax on the sale 7 or use, or the occupation tax, was computed. A tax is not due 8 in this state on the bottled water if the tax imposed and paid 9 in the other state is equal to or more than the tax imposed by 10 this chapter. 11 Sec. 5. NEW SECTION . 423G.5 Administration by director. 12 1. The director of revenue shall administer the excise tax 13 on the sale and use of bottled water as nearly as possible in 14 conjunction with the administration of the state sales and use 15 tax law, except that portion of the law that implements the 16 streamlined sales and use tax agreement. The director shall 17 provide appropriate forms, or provide on the regular state tax 18 forms, for reporting bottled water tax liability. 19 2. The director may require all persons who are engaged 20 in the business of deriving any sales price or purchase 21 price subject to tax under this chapter to register with 22 the department. The director may also require a tax permit 23 applicable only to this chapter for any retailer not 24 collecting, or any user not paying, taxes under chapter 423. 25 3. Section 422.25, subsection 4, sections 422.30, 422.67, 26 and 422.68, section 422.69, subsection 1, sections 422.70, 27 422.71, 422.72, 422.74, and 422.75, section 423.14, subsection 28 1, and sections 423.23, 423.24, 423.25, 423.31 through 29 423.35, 423.37 through 423.42, and 423.47, consistent with the 30 provisions of this chapter, shall apply with respect to the 31 tax authorized under this chapter, in the same manner and with 32 the same effect as if the excise taxes on the sale or use of 33 bottled water were retail sales taxes within the meaning of 34 those statutes. Notwithstanding this subsection, the director 35 -2- LSB 2405XS (2) 87 mm/sc/rj 2/ 4

S.F. 459 shall provide for quarterly filing of returns and for other 1 than quarterly filing of returns both as prescribed in section 2 423.31. All taxes collected under this chapter by a retailer 3 or any user are deemed to be held in trust for the state of 4 Iowa. 5 Sec. 6. NEW SECTION . 423G.6 Deposit of revenues. 6 1. All moneys received and all refunds shall be deposited in 7 or withdrawn from the general fund of the state. 8 2. Subsequent to the deposit in the general fund of the 9 state, the department shall transfer the revenues collected 10 under this chapter to the water quality initiative fund created 11 in section 466B.45. 12 Sec. 7. NEW SECTION . 423G.7 Future repeal. 13 This chapter is repealed upon the occurrence of one of the 14 following, whichever is earlier: 15 1. The enactment date that the tax rate for the sales 16 tax imposed upon the retail sales price of tangible personal 17 property and the furnishing of enumerated services sold in this 18 state in effect on July 1, 2016, is increased. 19 2. July 1, 2029. 20 Sec. 8. Section 466B.45, subsection 2, Code 2017, is amended 21 to read as follows: 22 2. The fund shall include moneys transferred to the fund 23 by law or appropriated by the general assembly. The fund may 24 include other moneys available to and obtained or accepted by 25 the division, including moneys from public or private sources. 26 EXPLANATION 27 The inclusion of this explanation does not constitute agreement with 28 the explanation’s substance by the members of the general assembly. 29 This bill relates to state taxation by creating an excise tax 30 on the sale or use of bottled water, providing for the transfer 31 of the excise tax revenues, and making appropriations. 32 The bill creates an excise tax at the rate of 6 percent on 33 the sales price or purchase price of bottled water sold or used 34 in Iowa. “Bottled water” is defined in the bill. The director 35 -3- LSB 2405XS (2) 87 mm/sc/rj 3/ 4

S.F. 459 of revenue is required to administer the excise tax as nearly 1 as possible in conjunction with the administration of the state 2 sales and use tax laws, and, to that end, the bill incorporates 3 by reference numerous Code sections that relate to general tax 4 administration and the sales and use tax laws. 5 The bill exempts from the excise tax any transaction that 6 would be exempt from the state sales tax under Code section 7 423.3 (sales tax exemptions), except for the exemptions for 8 food and food ingredients in Code section 423.3(57) and for 9 items purchased with food stamps and other similar federal 10 benefits in Code section 423.3(58). The bill also exempts the 11 use of bottled water from the tax if the excise tax has already 12 been paid on the purchase of the bottled water. Finally, the 13 bill provides a credit equal to the amount of similar tax paid 14 in another state by the same taxpayer relating to the bottled 15 water subject to the excise tax in Iowa. However, the credit 16 cannot exceed the amount of excise tax due in Iowa on the 17 bottled water. 18 Bottled water excise tax revenues are deposited in the 19 general fund of the state, and the bill then requires all 20 excise tax revenues to be transferred to the water quality 21 initiative fund created in Code section 466B.45. 22 The bottled water excise tax is repealed on the enactment 23 date that the state sales tax rate in effect on July 1, 2016, is 24 increased or on July 1, 2029, whichever occurs earlier. 25 -4- LSB 2405XS (2) 87 mm/sc/rj 4/ 4