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In Washington State, the sale of machinery and equipment used directly in generating electricity using wind, solar, or landfill gas is exempt from sales tax.
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Washington
Sales and Use Tax Exemptions for Landfill Gas Energy Projects
Exempting beneficial activities from taxation is a powerful tool states have at their disposal to encourage a wide range of improvements. For example, states can encourage landfill owners and operators to develop landfill gas utilization projects by offering exemptions on sales and use taxes related to landfill methane recovery.
In May 2001, Washington State enacted HB 1859, which exempts electric generating facilities powered by landfill gas from sales and use taxes. The legislation states:
The tax . . . shall not apply to sales of machinery and equipment used directly in generating electricity using fuel cells, wind, sun, or landfill gas as the principal source of power, or to sales of or charges made for labor and services rendered in respect to installing such machinery and equipment, but only if the purchaser develops with such machinery, equipment, and labor a facility capable of generating not less than two hundred watts of electricity . . .
This exemption reduces taxes on electric generating facilities by 7.5 to 8 percent, depending on how local governments apply sales tax. The exemption includes installation costs and is limited to facilities capable of generating at least 200 watts of electricity. The exemption expires June 30, 2009.
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