A city pays no sales tax on the purchase of a new fire truck used to fight a fire, but the same can’t be said for the water it uses to extinguish the flames.
The City of Freeport was unaware of the sales tax charge on water used for public safety purposes, and was hit in 2010 with an $8,217 bill for three year’s worth of back sales taxes on water it used for firefighting, hydrant flushing and cleaning of water towers.
Although a similar bill was not acted on last year, Rep. Paul Anderson (R-Starbuck) is trying again with
HF106. Heard by the House Taxes Committee Feb. 9, the bill was laid over for possible inclusion in a committee omnibus bill. It has no Senate companion.
His bill would expand the sales tax exemption for certain goods and services to local governments to include water used for public safety purposes. It would be retroactive to June 30, 2007; however, no refunds would be made for taxes paid before Jan. 30, 2010.
“This is a fairness issue,” and there needs to be clarification as to what is and isn’t exempt, he said.
According to the Revenue Department, the bill carries with it a $137,000 cost in fiscal year 2012.
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