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Bill would exempt contractors from paying sales tax on materials used for state projects; tax department cites base-alignment and administration issues
Summary
Representative Mike Berg and a private citizen testified for House Bill 1546, which would exempt contractors buying materials for state construction projects from sales tax to avoid reimbursement inefficiencies; the tax department said aligning local and state tax bases and administrative rules would require further work.
Representative Mike Berg and private-citizen witness Sean Johnson told the Finance and Taxation Committee that House Bill 1546 aims to eliminate an inefficiency in state construction procurement: contractors currently pay sales tax on materials and the state later reimburses that tax as part of contract pay applications, a cycle Johnson described as “money for nothing.”
Johnson provided an illustrative example tied to a hypothetical $95 million state project under study: he said roughly…
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