Local Sales Tax Measure X
On November 8, 2016, the citizens of Wasco approved and authorized a one-percent (1%) sales tax increase known as Measure X, or the Enhanced City Services Measure. Funds from this measure are to be used for essential general services, including but not limited to police and fire services, streets, parks and recreation, and other General Fund services.
As a means of checks and balances for these funds, the City Council ordinance will require a Sales Tax Oversight Committee to oversee the effective and efficient utilization of these additional funds and an independent accounting firm will perform an annual audit as specified in Government Code Section 6505.
Why is the City doing this?
The City of Wasco faces financial challenges due to a variety of factors that include the economic downturn, rising pension and healthcare costs, and unprecedented state takeaways coupled with additional unfunded state mandates, and the abolishment of the redevelopment agency.
In order to resolve some of these issues, the City has taken and is taking necessary steps to reduce its operational costs such as implementing cost saving measures by consolidating services and eliminating unnecessary overhead. The City Council has continued to seek alternative measures to address these ongoing costs and to secure local revenues from the state.
What is the new tax rate?
Effective April 1, 2017, the new sales tax rate for the City of Wasco is 8.25%.
Farming Exemptions – Farm Equipment and Machinery
In general, the sale of farm equipment and machinery is taxable. However, certain sales and purchases are partially exempt from sales and use tax.
The partial exemption applies only to the state general fund portion of the sales tax, currently 5.00%.
To calculate the tax rate for qualifying transactions, subtract 5.00% from the sales tax rate that would normally apply at the location where the purchase is made. For the City of Wasco, the current tax rate is 8.25%, and the tax rate for a qualifying transaction would be 3.25%.
Three requirements must be met for the partial exemption to apply. The item must be:
- Sold to a qualified person (see A Qualified Person below)
- Used exclusively or primarily in producing and harvesting agricultural products. Primarily means 50% or more of the time.
- Farm equipment and machinery which includes, but is not limited to, any tool, machine, equipment, appliance, device or apparatus used in the conduct of agricultural operations.
If any of the first three requirements is not met, the partial exemption does not apply and the sale or purchase is fully taxable.
When a lease meets the three requirements above, and the lease payments are taxable, the lease may also qualify for the partial exemption.
Mobile transportation equipment does not qualify for the exemption.
A Qualified Person
A “qualified person” is one whose business falls within the specified Standard Industrial Classification (SIC) Codes listed below:
- Ranchers, farmers and other growers who operate businesses described in SIC Codes 0111 to 0291 (generally covers most agricultural businesses but excludes timber production).
- A person who assists a qualified rancher, farmer or grower by performing a service described in SIC Codes 0711 to 0783 (includes soil preparation, crop harvesting, crop market preparation, veterinary services and farm and labor management).
For a full list of applicable SIC Codes, please see Appendix C of publication 66, Agricultural Industry. For more information on SIC Codes please select SIC/NAICS Search from the index on the Occupational Safety and Health Administration (OSHA) website.
For More Information
Please see the documents below –