On WSDOT Projects performed on State Lands(State Department of Revenue Rule 170), all labor, equipment and material costs have sales tax added to the contract total. Why doesn't the Traffic Improvement Initiative exempt sales tax from the labor and equipment costs?

-- Steve E. Busch (steve@maxkuney.com), January 11, 2000

Answers

Very, very good question. And one that has been the subject of some controversy, for some time. What this basically comes down to, is a way to 'launder' monies from one part of the states budget, to another. In essence, they charge themselves sales tax, and that way they can move 8.x% of every project out of the funds from say, the transportation budget into the general fund.

-- Paul Oss (jnaut@earthlink.net), January 11, 2000.

You've written in part:

"In essence, they charge themselves sales tax, and that way they can move 8.x% of every project out of the funds from say, the transportation budget into the general fund."

Actually... It's 6.5%. Any percentage over that 6.5 is caused by local option taxes - transit, criminal justice, detention facilities...

-- Curious George (---@---.---), January 11, 2000.

Thank you for that clarification. I've never been sure what the base state sales tax is. I knew that nearly 1/3 of it was local and county stuff.

-- Paul Oss (jnaut@earthlink.net), January 12, 2000.

You should note that ALL governments (except federal) are required to pay the sales tax applicable at the point of purchase, or at the point of delivery if it is purchased from an out of state company. Same issue. Local taxes collected to provide local services, get diverted to the state general fund.

Also, I am not sure how the state sets the "prevailing wage" amounts required on public works projects. I don't know of many who would pay those rates, except on a public works job; so how did that make them "prevailing"?

-- dbvz (dbvz@wa.freei.net), January 12, 2000.

db--regarding prevailing wage laws. From what I can tell, prevailing wage legislation is used to ensure that bidders for state/local projects can't use wage competition in their bid. What I've never heard is a non-self-serving explanation of why wage competition should be treated differently from other types of competition?

-- Brad (knotwell@my-deja.com), January 12, 2000.

Prevailing wage must be something like prevailing winds.. only in this case the wind is government. There are lot's of states that DON'T use prevailing wage justification for contracts. they just farm out to the lowest bidder

-- maddjak (maddjak@hotmail.com), January 13, 2000.

One point, sometimes when working a federal contract you end up paying sales tax on the project. When you do, the federal government makes you keep a special account of it. You have to save all the receipts and you have to have detailed info on the reciept. If it did not print you had to write it down at the business at the time and sign and date it.

You get the money back from the feds for the tax you paid. I remember it said in the procurement regulations that they will get reinbursement from the collecting authority. This means whoever got the money will have to give it back to the feds.

An example of this is gasoline, have you ever tried to get a gas station not to charge you sales tax. You come up with contract numbers and even all the correct paperwork(about an 1"to 1.5" they just don't know what to do. They tell me to take a hike because they don't understand.

Government is weird and too cumbersome. No one wants to deal with it.

Why can't we get construction companies to do the same thing and the contractor will get credited???

Would that work?

-- Dan Campbell (dila813@hotmail.com), January 14, 2000.

Dan you speak about the sales tax re-imbursement program by the FEDS. The program doesn't work from the federal standpoint so it wouldn't work from the local standpoint. It may SEEM to work but the reason it really doesn't work is because of the ENORMOUS cost of implementing the refund/re-imbursement. Hundreds, maybe even thousands of employees are required to facilitate the return of money that should have simply NOT been collected to begin with. Tax on gasoline??? There is a simple solution for that one. Just fill up your vehicles at one of the government pumps.. There ain't no tax on them.

-- maddjak (maddjak@hotmail.com), January 14, 2000.