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1999 SESSION

994498176
SENATE BILL NO. 735
FLOOR AMENDMENT IN THE NATURE OF A SUBSTITUTE
(Proposed by Delegate Cranwell
on February 17, 1999)
(Patron Prior to Substitute--Senator Marye)
A BILL to amend the Code of Virginia by adding a section numbered 58.1-611.1, relating to rate of tax on food purchased for human consumption; Food Tax Reduction Program.

Be it enacted by the General Assembly of Virginia:

1. That the Code of Virginia is amended by adding a section numbered 58.1-611.1 as follows:

§ 58.1-611.1. Rate of tax on sales of food purchased for human consumption; Food Tax Reduction Program.

A. Subject to the conditions of subsections D and E, the tax imposed by this chapter or pursuant to the authority granted in §§ 58.1-605 and 58.1-606 shall not apply to food purchased for human consumption, as defined in subsection C, on and after July 1, 2003. Until that date, such tax shall be levied and distributed as follows:

1. Beginning August 1, 1999, through June 30, 2000, the tax rate on such food shall be four percent of the gross sales price with the one-half percent that is eliminated resulting in a reduction of only the state’s general fund share of the revenues collected. The revenue from the tax shall be distributed as follows: (i) the revenue from the tax at the rate of one-half percent shall be distributed as provided in subsection A of § 58.1-638, (ii) the revenue from the tax at the rate of one percent shall be distributed as provided in subsections B, C and D of § 58.1-638, (iii) the revenue from the one percent local option sales and use tax shall be distributed in accordance with the provisions of §§ 58.1-605 and 58.1-606, and (iv) the revenue from the tax at the rate of one and one-half percent shall be used for general fund purposes.

2. From July 1, 2000, through June 30, 2001, the tax rate on such food shall be three percent of the gross sales price with the one and one-half percent that is eliminated resulting in a reduction of only the state’s general fund share of the revenues collected. The revenue from the tax shall be distributed as follows: (i) the revenue from the tax at the rate of one-half percent shall be distributed as provided in subsection A of § 58.1-638, (ii) the revenue from the tax at the rate of one percent shall be distributed as provided in subsections B, C and D of § 58.1-638, (iii) the revenue from the one percent local option sales and use tax shall be distributed in accordance with the provisions of §§ 58.1-605 and 58.1-606, and (iv) the revenue from the tax at the rate of one-half percent shall be used for general fund purposes.

3. From July 1, 2001, through June 30, 2002, the tax rate on such food shall be two percent of the gross sales price. The revenue from the tax shall be distributed as follows: (i) the revenue from the tax at the rate of one percent shall be distributed as provided in subsections B, C and D of § 58.1-638 and (ii) the revenue from the one percent local option sales and use tax shall be distributed in accordance with the provisions of §§ 58.1-605 and 58.1-606. The foregone one-half percent state sales and use tax dedicated to the Transportation Trust Fund shall continue to be funded from other state revenues collected under this chapter as if such foregone amounts were collected and shall be distributed as provided in subsection A of § 58.1-638.

4. From July 1, 2002, through June 30, 2003, the tax rate on such food shall be one percent of the gross sales price. The revenue from the one percent local option sales and use tax shall be distributed in accordance with the provisions of §§ 58.1-605 and 58.1-606. The foregone one-half percent state sales and use tax dedicated to the Transportation Trust Fund and the foregone one percent state sales and use tax returned to localities based on school-age population shall continue to be funded from other state revenues collected under this chapter as if such foregone amounts were collected and shall be distributed in accordance with the provisions of § 58.1-638.

5. On and after July 1, 2003, the tax rate on such food shall be eliminated. The foregone one-half percent state sales and use tax dedicated to the Transportation Trust Fund and the foregone one percent state sales and use tax returned to localities based on school age population shall continue to be funded from other state revenues collected under this chapter as if such foregone amounts were collected and shall be distributed in accordance with the provisions of § 58.1-638. The foregone one percent local option sales and use tax shall be funded from other state revenues collected under this chapter as if such foregone amount were collected and shall be distributed in accordance with the provisions of §§ 58.1-605 and 58.1-606.

B. Any percentage reduction and the total elimination of the sales and use tax on food purchased for human consumption shall result in the reduction of only the state’s share of the revenues collected under this chapter. The Transportation Trust Fund, the school-age population and the local option shares shall not be reduced or eliminated.

C. As used in this section, “food purchased for human consumption” has the same meaning as “food” defined in the Food Stamp Act of 1977, 7 U. S. C. § 2012, as amended, and federal regulations adopted pursuant to that act, except it shall not include seeds and plants which produce food for human consumption.

D. Notwithstanding the tax rates set forth in subsection A, the rate of tax on sales of food purchased for human consumption shall not be reduced below the rate in effect for the Commonwealth’s preceding fiscal year if:

1. Actual general fund revenues for the second fiscal year preceding a fiscal year in which a rate reduction is contemplated in subsection A do not exceed the official general fund revenue estimates for such second preceding fiscal year, as estimated in the most recently enacted and approved general appropriation act, by at least one percent; or

2. Any of the events listed in subsection C of § 58.1-3524 or subsection B of § 58.1-3536 have occurred.

E. If the tax rate on food purchased for human consumption remains the same for consecutive fiscal years, the tax rate on such food shall remain the same unless none of the conditions described in subsection D have occurred, in which event the tax rate on food purchased for human consumption for the immediately following fiscal year shall be equal to the next lowest tax rate listed in subsection A.