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NO RINGTONE OR GAS TAX BOOST THIS YEAR?

April 27, 2007

The legislature passed the tax technical provisions bill (HF 923) without the provision that would have required folks downloading ringtones and iTunes to file personal sales tax returns on the downloads. Radio Iowa reports:

The Iowa House has voted against a Senate-backed plan that seeks to tax music, movies and ring tones that're downloaded from the Internet. Critics of the idea said it was ridiculous to expect people to keep track of their Internet downloads, and send the state a check for sales tax on each transaction.

Representative Thomas Schueller, a Democrat from Maquoketa, said the debate had been an eye-opening experience. "I now understand what a ring tone is. Before this bill, I had no clue," he said. "...I think I might actually be able to download one now, too." The tax on Internet downloads have been stuck in a bill that dealt with all sorts of tax issues. The Senate now must decide whether to insist on what some have called the "iPod" tax.

The legislature did take action against a menace facing Iowa youths: candy machines stocked with smokes.

Another provision tucked into the bill, and which got House backing, would forbid businesses from stocking vending machines with both snacks and smokes. Representative Schueller nicknamed it the "Twinkie Clause." "This is an obvious good change. It prohibits cigarettes and cigars from being displayed and/or dispensed from the same vending machines as snacks or candies," he says. "No one wants junior going to the (vending) machine to buy a Twinkie, and come back with a Marlboro instead."

Except junior, maybe. Actually, I have never seen a vending machine that carried Twinkies and cigarettes. Seeing either one of these products would ruin my appetite for the other, but maybe Twinkies and smokes are just meant to go together.

Meanwhile, the the legislature may see some last ditch action on new tax bills today. The Des Moines Register reports that Senate Majority Leader Gronstal is likely to push through his chamber a bill to replace the 1% local option sales tax with a statewide 1% levy, but that it may not make it further:

But beyond Senate support for the tax plan, its fate is uncertain, Gronstal said, citing reservations by Gov. Chet Culver and House Democratic leaders.

Brad Anderson, the governor's spokesman, said Culver "has made it clear that the sales and use tax is not on his agenda for the session."

House Majority Leader Kevin McCarthy, a Des Moines Democrat, said House action on the tax issue was unlikely at the tail end of the session. "I don't see it having enough momentum at this stage," he said.

The bill would also increase the "use tax" on vehicle sales - in effect, the sales tax on cars - by 1%.

The Sioux City Journal reports that plans to increase the gas tax and vehicle registration fees are dead for this year.

Follow tax legislation through the close of the session at our2007 Iowa Tax Legislation page.

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