By STEVE BROWN
OLYMPIA -- The Senate Agriculture Committee has recommended a tax measure that may help attract a major dairy product manufacturer to Washington state.
Amending a definition of which dairy products are exempt from the business and occupation tax would put the state "on more of a level playing field with other states," one industry supporter said.
Sharon Appelt, tax director for the Northwest Dairy Association and its marketing arm, Darigold, said her company has the opportunity to attract one of the three largest infant formula manufacturers in the world. The company would primarily produce a dairy-based nutritional powder for distribution to undeveloped countries in Southeast Asia and Africa.
Appelt said she could not divulge the name of the manufacturer because talks are still at a "high level."
"B&O is definitely an issue for them," she said. "It makes us unappealing. That's their message to us."
The current federal definitions of dairy are specific to basic and traditional products and do not encompass value-added products like infant formula.
Senate Bill 5561, sponsored by Sen. Brian Hatfield, D-Raymond, adds to that definition products consisting of not less than 70 percent dairy by weight or volume.
Until July 1, 2015, sales of dairy products manufactured in Washington and manufactured dairy products that are sold for transportation out of state are exempt from B&O taxes. After that date, they will be subject to a rate of 0.138 percent.
Milk and whey are already exempted because they are sold by Darigold outside the state. SB5561 allows dairy to be incorporated into a higher-value product, Appelt said.
Dan Coyne, also of the Northwest Dairy Association and Darigold, said the bill was worded narrowly so it would not create a large fiscal impact.
"We didn't want to say infant formula only," he said, "because there may be little boxes of shelf-stable, dairy-based nutritional drinks for teens or adults that could be exported as well."
He said the legislation holds opportunity for economic development and additional jobs in Central Washington.
The measure now goes to the Senate Ways and Means Committee.