It is enacted by the General Assembly as follows

SECTION 1. Legislative findings and purposes

(a) The general assembly finds and declares that there are financial incentives to those fleet operators who volunteer to purchase alternative fueled vehicles and who construct and equip alternative fueling facilities.

(4) to facilitate the development of alternative fueling stations which will be needed to support the use of alternative fueled vehicles.

SECTION 2. Section 31-36-1 of the General Laws in Chapter 31-36 entitled "Gasoline Tax" is hereby amended to read as follows:

31-36-1. Definitions. -- Terms in this chapter and chapter 37 of this title shall be construed as follows:

(a) "Administrator" shall mean the tax administrator.

(b) "Distributor" shall include any person, association of persons, firm, or corporation, wherever resident or located, who shall import or cause to be imported into this state, for use or for sale, fuels, and also any person, association of persons, firm or corporation who shall produce, refine, manufacture, or compound fuels within this state.

(c) "Filling station" shall include any place, location, or station where fuels are offered for sale at retail.

(d) "Fuels" shall include gasoline, benzol, naphtha, and other volatile and inflammable liquids (other than lubricating oils, diesel fuel for the propulsion of marine craft, fuels used for the propulsion of airplanes, and oils used for heating purposes), used or suitable for use for operating or propelling motor vehicles using internal combustion type of engines; provided that the term "fuels" shall not include benzol and naphtha sold or used for a purpose otherwise than in the operation or propelling of motor vehicles {DEL . DEL} {ADD ; provided, that, from January 1, 1998 until December 31, 2002, the term "fuels" shall not include alternative fuels, as defined pursuant to the Energy Policy Act of 1992 (P.L. 102-486, Sec. 301 (42 U.S.C. 13211)), used by fleets consisting of ten (10) or more alternative fueled vehicles provided that the alternative fuels are separately metered. ADD} Any article or product represented as gasoline for use in internal combustion type engines, used in motor vehicles, shall be equal to or better in quality and specification than that known as "United States government motor gasoline."

(e) "Investigator and examiner" shall mean any person appointed by the tax administrator to act as an investigator and examiner.

(f) "Owner" shall include any person, association of persons, firm, or corporation offering fuels for sale at retail.

(g) "Peddlers" shall mean any person, association of persons, firm or corporation, except a distributor as defined in this chapter, who shall distribute gasoline by tank wagon in this state.

(h) "Public highways" shall include any state or other highway and any public street, avenue, alley, park, parkway, driveway, or public place in any city or town.

(i) "Pump" shall include any apparatus or machine for raising, driving, exhausting, or compressing fluids, and used in the sale and distribution of fuels.

(j) "Purchaser" shall include any person, association of persons, firm, or corporation, wherever resident or located, who purchases fuels from a distributor, for use or resale, and any person, association of persons, firm or corporation who purchases from a distributor, gasoline or other volatile and inflammable liquids (other than lubricating oils and oils used for heating purposes) for use other than for propelling motor vehicles.

(k) "Retail dealer" shall mean any person, association of persons, firm, or corporation operating a filling station as herein defined in this chapter for the sale or dispensing of motor fuel by delivery into service tank or tanks of any highway motor vehicle which is propelled by an internal combustion motor, other than the highway motor vehicle belonging to the person owning or operating the place of business; provided, however, that sales by a manufacturer or distributor shall not constitute them retail dealers.

(l) "State highways" shall include only such public highways or such parts thereof as shall be constructed or maintained by the department of transportation.

(m) "United States government motor gasoline" shall mean that gasoline which is or may be prescribed by the federal specification board of the United States government for use as a fuel for motor vehicle, motor boat, and similar engines.

SECTION 3. Section 44-13-5 of the General Laws in Chapter 44-13 entitled "Public Service Corporation Tax" is hereby amended to read as follows:

{DEL 44-13-5. Deductions for merchandise sales. -- DEL} {ADD 44-13-5. Deductions for merchandise sales and alternative fuel. -- ADD} {ADD (a) ADD} In the case of every corporation the principal business of which is manufacturing, selling, and distributing to the public illuminating or heating gas, and upon which a tax is imposed under section 44-13-4(5), and in the case of every corporation upon which a tax is imposed under section 44-13-4(2), there shall be allowed as a deduction from the gross earnings from merchandise sales reported by that corporation in its gross earnings tax returns, the net invoice price plus the transportation cost of the merchandise.

{ADD (b) In the case of every corporation upon which a tax is imposed under section 44-13-4 there shall be allowed as a deduction from the gross earnings from sales reported by that corporation in its gross earnings tax returns, the total of gross earnings from the sale of alternative fuel as defined pursuant to the Energy Policy Act of 1992 (P.L. 102-486, Sec. 301 (42 U.S.C. 13211)) when used as a separately metered motor fuel that powers a motor vehicle, from January 1, 1998 until December 31, 2002. ADD}

SECTION 4. Section 44-18-30 of the General Laws in Chapter 44-18 entitled "Sales and Use Taxes -- Liability and Computation" is hereby amended to read as follows:

44-18-30. Gross receipts exempt from sales and use taxes. ›Effective until July 1, 1997.! -- There are exempted from the taxes imposed by this chapter the following gross receipts:

(1) Sales and uses beyond constitutional power of state. From the sale and from the storage, use, or other consumption in this state of tangible personal property the gross receipts from the sale of which, or the storage, use, or other consumption of which, this state is prohibited from taxing under the Constitution of the United States or under the constitution of this state.

(2) Newspapers. (i) From the sale and from the storage, use, or other consumption in this state of any newspaper.

(ii) "Newspaper" shall mean an unbound publication printed on newsprint which contains news, editorial comment, opinions, features, advertising matter and other matters of public interest.

(iii) "Newspaper" does not include a magazine, handbill, circular, flyer, sales catalog, or similar item unless the item is printed for and distributed as a part of a newspaper.

(3) School meals. From the sale and from the storage, use, or other consumption in this state of meals served by public, private, or parochial schools, school districts, colleges, universities, student organizations, and parent-teacher associations to the students or teachers of a school, college, or university whether the meals are served by the said educational institutions or by a food service or management entity under contract to said educational institutions.

(4) Containers. (i) From the sale and from the storage, use, or other consumption in this state of:

(A) Nonreturnable containers (including boxes, paper bags, and wrapping materials which are biodegradable and all bags and wrapping materials utilized in the medical and healing arts) when sold without the contents to persons who place the contents in the container and sell the contents with the container.

(B) Containers when sold with the contents if the sale price of the contents is not required to be included in the measure of the taxes imposed by this chapter.

(C) Returnable containers when sold with the contents in connection with a retail sale of the contents or when resold for refilling.

(ii) As used herein the term "returnable containers" means containers of a kind customarily returned by the buyer of the contents for reuse. All other containers are "nonreturnable containers."

(5) Charitable, educational, and religious organizations. (i) From the sale to as herein defined, and from the storage, use, and other consumption in this state or any other state of the United States of America of tangible personal property by hospitals not operated for a profit, "educational institutions" as defined in subdivision (18) of this section not operated for a profit, churches, orphanages, and other institutions or organizations operated exclusively for religious or charitable purposes, interest free loan associations not operated for profit, nonprofit organized sporting leagues and associations and bands for boys and girls under the age of nineteen (19) years, the following vocational student organizations that are state chapters of national vocational students organizations: distributive education clubs of America, (DECA); future business leaders of America/Phi Beta Lambda (FBLA/PBL); future farmers of America (FFA); future homemakers of America/home economics related occupations (FHA/HERD); and vocational industrial clubs of America (VICA) organized nonprofit golden age and senior citizens clubs for men and women, and parent-teacher associations.

(ii) In the case of contracts entered into with the federal government, its agencies or instrumentalities, this state or any other state of the United States of America, its agencies, any city, town, district, or other political subdivision of the states, hospitals not operated for profit, educational institutions not operated for profit, churches, orphanages, and other institutions or organizations operated exclusively for religious or charitable purposes, the contractor may purchase such materials and supplies (materials and/or supplies are hereby defined as those which are essential to the project) as are to be utilized in the construction of the projects being performed under the contracts without payment of the tax.

(iii) The contractor shall not charge any sales or use tax thereon to any exempt agency, institution, or organization but shall in such an instance provide his or her suppliers with certificates in the form as determined by the division of taxation showing the reason for exemption; and the contractor's records must substantiate the claim for exemption by showing the disposition of all property so purchased. If any property is then used for a nonexempt purpose, the contractor must pay the tax on the property used.

(6) Gasoline. (i) From the sale and from the storage, use, or other consumption in this state of (a) gasoline and other products taxed under chapter 36 of title 31 and (b) fuels used for the propulsion of airplanes.

(7) Purchase for manufacturing purposes. (i) From the sale and from the storage, use, or other consumption in this state of tangible personal property, electricity, natural gas, artificial gas, steam, refrigeration, and water, when the property or service is purchased for the purpose of being manufactured into a finished product for resale, and becomes an ingredient, component, or integral part of the manufactured, compounded, processed, assembled, or prepared product; or if the property or service is consumed directly in the process of manufacturing for resale tangible personal property, electricity, natural gas, artificial gas, steam, refrigeration, or water, provided, however, that the consumption occurs within one year from the date the property or service is first used or applied in the process of manufacturing.

(ii) "Consumed directly" means destroyed, used up, or worn out to the degree or extent that the property cannot be repaired, reconditioned, or rendered fit for further manufacturing use.

(iii) "Consumed directly" does not mean or include mere obsolescence.

(iv) "Manufacturing" means and includes manufacturing, compounding, processing, assembling, preparing, or producing.

(v) "Process of manufacturing" means and includes all production operations performed in the producing or processing room, shop, or plant, insofar as the operations are a part of and directly connected with the manufacturing for resale tangible personal property, electricity, natural gas, artificial gas, steam, refrigeration, or water.

(vi) "Process of manufacturing" does not mean or include administration operations such as general office operations, accounting, collection, sales promotion, and experimental work, nor shall it mean or include distribution operations which occur subsequent to production operations, such as handling, storing, selling, and transporting the manufactured products, even though the administration and distribution operations are performed by or in connection with a manufacturing business.

(8) State and political subdivisions. From the sale to, and from the storage, use, or other consumption by, this state, any city, town, district, or other political subdivision of this state. Every redevelopment agency created pursuant to chapter 31 of title 45 shall be deemed to be a subdivision of the municipality wherein it is located.

(9) Food products. (i) From the sale and the storage, use, or other consumption in this state, subsequent to March 31, 1948, of food products for human consumption.

(ii) "Food products" shall, except as herein otherwise provided, include cereals and cereal products; milk and milk products, other than candy and confectionery, but including ice cream; oleomargarine; meat and meat products; fish and fish products; eggs and egg products; vegetables and vegetable products; fruit and fruit products, including pure fruit juices; spices, condiments, and salt; sugar and sugar products other than candy and confectionery; coffee and coffee substitutes; tea, cocoa, and cocoa products, other than candy and confectionery; non-carbonated and non-effervescent bottled waters sold for human consumption.

(iii) "Food products" does not include spirituous, malt, or vinous liquors; soft drinks, sodas, or beverages such as are ordinarily dispensed at bars or soda fountains or in connection therewith; medicines, tonics, vitamins, and preparations in liquid, powdered, granular, tablet, capsule, lozenge, or pill form, sold as dietary supplements or adjuncts, except when sold on the prescription of a physician; mineral and carbonated bottled waters and ice.

(iv) "Food products" also does not include meals served on or off the premises of the retailer; or drinks or food furnished, prepared, or served for consumption at tables, chairs, or counters, or from trays, glasses, dishes, or other tableware provided by the retailer.

(v) The sale of meals and other food products ordinarily sold for immediate consumption on or off the premises of the retailer is a taxable sale even though the products are sold on a "take out" or "to go" order, and are actually packaged or wrapped and taken from the premises.

(10) Medicines and drugs. From the sale and from the storage, use, or other consumption in this state, subsequent to March 31, 1948, of "medicines" and "drugs" as defined in section 5-19-1, sold on prescriptions, and proprietary medicines, popularly called patent medicines.

(11) Prosthetic and orthopedic appliances. From the sale and from the storage, use, or other consumption in this state, subsequent to March 31, 1948, of crutches, artificial limbs, dentures, spectacles and eyeglasses, artificial eyes, artificial hearing devices, and other prostheses or orthopedic appliances, designed and purchased to be worn on the person of the owner or user.

(12) Coffins, caskets, and burial garments. From the sale and from the storage, use, or other consumption in this state of coffins or caskets, and shrouds or other burial garments which are ordinarily sold by a funeral director as part of the business of funeral directing.

(13) Motor vehicles sold to nonresidents. (i) From the sale, subsequent to June 30, 1958, of a motor vehicle to a bona fide nonresident of this state who shall not register the motor vehicle in this state, whether the sale or delivery of the motor vehicle is made in this state or at the place of residence of the nonresident; provided, however, that a motor vehicle sold to a bona fide nonresident whose state of residence does not allow a like exemption to its nonresidents shall not be exempt from the tax imposed under section 44-18-20; provided further that in such an event the bona fide nonresident shall pay a tax to Rhode Island on the sale at a rate equal to the rate that would be imposed in his or her state of residence not to exceed the rate that would have been imposed under section 44-18-20. Notwithstanding any other provisions of the law a licensed motor vehicle dealer shall add and collect the tax required under this subsection and remit same to the tax administrator under the provisions of chapters 18 and 19 of this title. Provided, further, when a Rhode Island licensed motor vehicle dealer is required to add and collect the sales and use tax on the sale of a motor vehicle to a bona fide nonresident as provided in this section, said dealer in computing the tax shall take into consideration the law of the state of the nonresident as it relates to the trade-in of motor vehicles.

(ii) The tax administrator, in addition to the provisions of sections 44-19-27 and 44-19-28, may require any licensed motor vehicle dealer to keep such records of sales to bona fide nonresidents as the tax administrator shall deem reasonably necessary to substantiate the exemption herein provided, including the affidavit of a licensed motor vehicle dealer that the purchaser of the motor vehicle was the holder of, and had in his or her possession a valid out-of-state motor vehicle registration or a valid out-of-state driver's license.

(iii) Any nonresident who shall register a motor vehicle in this state within ninety (90) days of the date of its sale to him or her shall be deemed to have purchased the motor vehicle for use, storage, or other consumption in this state, and shall be subject to, and liable for the use tax imposed under the provisions of section 44-18-20.

(14) Sales in public buildings by blind people. From the sale and from the storage, use, or other consumption in all public buildings in this state of all products or wares by any person licensed under section 40-9-11.1.

(15) Air and water pollution control facilities. From the sale, storage, use, or other consumption in this state of tangible personal property or supplies acquired for incorporation into or used and consumed in the operation of a facility, the primary purpose of which is to aid in the control of the pollution or contamination of the waters or air of the state, as defined in chapter 12 of title 46 and chapter 25 of title 23, respectively, and which has been certified as approved for that purpose by the director of environmental management. The director of environmental management may certify to a portion of the tangible personal property or supplies acquired for incorporation into those facilities or used and consumed in the operation of those facilities to the extent that that portion shall have as its primary purpose the control of the pollution or contamination of the waters or air of this state. As used herein, "facility" means any land, facility, device, building, machinery, or equipment.

(16) Camps. From the rental charged for living quarters, or sleeping or housekeeping accommodations at camps or retreat houses operated by religious, charitable, educational, or other organizations and associations mentioned in subdivision (5) of this section, or by privately owned and operated summer camps for children.

(17) Certain institutions. From the rental charged for living or sleeping quarters in an institution licensed by the state for the hospitalization, custodial, or nursing care of human beings.

(18) Educational institutions. From the rental charged by any educational institution for living quarters, or sleeping or housekeeping accommodations or other rooms or accommodations to any student or teacher necessitated by attendance at an educational institution. "Educational institution" as used in this section means an institution of learning not operated for profit which is empowered to confer diplomas, educational, literary, or academic degrees, which has a regular faculty, curriculum, and organized body of pupils or students in attendance throughout the usual school year, which keeps and furnishes to students and others records required and accepted for entrance to schools of secondary, collegiate, or graduate rank, no part of the net earnings of which inures to the benefit of any individual.

(19) Motor vehicle purchases by paraplegics. From the sale of a motor vehicle after July 1, 1969, to any person suffering from paraplegia provided that person shall furnish to the tax administrator an affidavit of a duly licensed physician to the effect that that person is a paraplegic or is suffering from paraplegia.

(20) Heating fuels. From the sale and from the storage, use, or other consumption in this state of every type of fuel used in the heating of homes and residential premises.

(21) Electricity and gas. From the sale and from the storage, use, or other consumption in this state of electricity and gas furnished for domestic use by occupants of residential premises.

(22) Manufacturing machinery and equipment. (i) From the sale and from the storage, use, or other consumption in this state of tools, dies, and molds, and machinery and equipment (including replacement parts thereof), used directly and exclusively in an industrial plant in the actual manufacture, conversion, or processing of tangible personal property to be sold, or such machinery and equipment used in the furnishing of power to an industrial manufacturing plant. For the purposes of this subdivision, the term "industrial plant" shall mean a factory at a fixed location primarily engaged in the manufacture, conversion or processing of tangible personal property to be sold in the regular course of business;

(ii) Machinery shall be deemed to be used directly and exclusively in the actual manufacture, conversion, or processing of tangible personal property to be sold only where the machinery is used solely during a manufacturing, conversion or processing operation; (A) to effect a direct and immediate physical change upon the tangible personal property to be sold; (B) to guide or measure a direct and immediate physical change upon the property where that function is an integral and essential part of tuning, verifying, or aligning the component parts of such property; (C) to test or measure the property where that function is an integral part of the production flow or function; (D) to store, transport, convey, or handle the property during the manufacturing, converting, or processing operations heretofore specified; or (E) to place the property in the container, package, or wrapping in which the property is normally sold to the ultimate consumer thereof;

(iii) Machinery used directly and exclusively in the actual manufacture, conversion or processing of any tangible personal property which is not to be sold and which would be exempt under subdivision (7) or this subdivision if purchased from a vendor thereof or machinery used during any manufacturing, converting or processing, conveying or packaging operation, or function or for any other purpose, except as heretofore specified, shall not be exempt under this subdivision even though that operation, function, or purpose is an integral or essential part of a continuous production flow or manufacturing process;

(iv) Where a portion of a group of portable or mobile machinery is used directly and exclusively in the actual manufacture, conversion, or processing of tangible personal property to be sold, as heretofore defined, that portion, if otherwise qualifying, shall be exempt under this subdivision even though the machinery in that group is used interchangeably and not otherwise identifiable as to use.

(23) Trade-in value of motor vehicles. From the sale and from the storage, use, or other consumption in this state of so much of the purchase price paid for a new or used automobile as is allocated for a trade-in allowance on the automobile of the buyer given in trade to the seller or of the proceeds applicable only to the motor vehicle as are received from an insurance claim as a result of a stolen or damaged motor vehicle, or of the proceeds applicable only to the automobile as are received from the manufacturer of automobiles for the repurchase of the automobile whether the repurchase was voluntary or not towards the purchase of a new or used automobile by the buyer; provided however that the proceeds from an insurance claim or repurchase shall be in lieu of the benefit set forth in section 44-18-21 for the total loss or destruction of the automobile, and provided, further, that the tax has not been reimbursed as part of the insurance claim or repurchase. For the purpose of this subdivision, the word "automobile" shall be construed to mean a private passenger automobile not used for hire and shall not be construed to refer to any other type of motor vehicle.

(24) Precious metal bullion. (i) From the sale and from the storage, use, or other consumption in this state of precious metal bullion, substantially equivalent to a transaction in securities or commodities.

(ii) For purposes of this subdivision "precious metal bullion" means any elementary precious metal which has been put through a process of smelting or refining, including, but not limited to, gold, silver, platinum, rhodium, and chromium, and which is in such state or condition that its value depends upon its content and not upon its form.

(iii) The term does not include fabricated precious metal which has been processed or manufactured for some one or more specific and customary industrial, professional, or artistic uses.

(25) Sales by the bicentennial commission. From the sale and from the storage or use of any articles sold by the bicentennial commission.

(26) Commercial vessels. From sales made to a commercial ship, barge, or other vessel of fifty (50) tons burden or over, primarily engaged in interstate or foreign commerce, and from the repair, alteration, or conversion of the vessels, and from the sale of property purchased for the use of the vessels including provisions, supplies, and material for the maintenance and/or repair of the vessels.

(27) Commercial fishing vessels. From the sale and from the storage, use, or other consumption in this state of vessels and other water craft which are in excess of five (5) net tons and which are used exclusively for "commercial fishing" as hereinafter defined, and the boats' nets, cables, tackle, and other fishing equipment appurtenant to or used in connection with the commercial fishing of the vessels. "Commercial fishing" means the taking or the attempting to take any fish, shellfish, crustacea, or bait species with the intent of disposing of them for profit or by sale, barter, trade, or in commercial channels. The term shall not include: subsistence fishing, i.e., the taking for personal use and not for sale or barter; or sport fishing; but shall include U.S.C.G. documented passenger carrying commercial fishing vessels which meet the following criteria: (i) a U.S.C.G. license to carry passengers for hire; (ii) U.S.C.G. vessel documentation in the coastwide fishery; (iii) U.S.C.G. vessel documentation as to proof of Rhode Island home port status or a Rhode Island boat registration to prove Rhode Island home port status; (iv) the vessel must be used as a commercial passenger carrying fishing vessel. The vessel must be able to demonstrate that at least fifty percent (50%) of its annual gross income derives from charters or provides documentation of a minimum of one hundred (100) charter trips annually; (v) the vessel must have a valid Rhode Island commercial fishing license. The tax administrator shall implement the provisions of this subdivision by promulgating rules and regulations relating thereto.

(28) Clothing and footwear. From the sales of articles of clothing, including footwear, intended to be worn or carried on or about the human body. For the purposes of this section clothing or footwear shall not include special clothing or footwear primarily designed for athletic activity or protective use and which is not normally worn except when so used; and sales of wearing materials or any cloth made of natural or synthetic fibers and used for clothing purposes.

(29) Water for residential use. From the sale and from the storage, use, or other consumption in this state of water furnished for domestic use by occupants of residential premises.

(30) Bibles. From the sale and from the storage, use, or other consumption in the state of any canonized scriptures of any tax exempt non-profit religious organization including but not limited to the old testament and the new testament versions.

(31) Boats. (i) From the sale, after May 19, 1982, of a boat or vessel to a bona fide nonresident of this state who shall not register the boat or vessel in this state, or document the boat or vessel with the United States government at a home port within this state, whether the sale or delivery of the boat or vessel is made in this state or elsewhere. Provided, that, the nonresident shall transport the boat within 30 days after delivery by the seller, outside the state for use thereafter solely outside the state.

(ii) The tax administrator, in addition to the provisions of sections 44-19-17 and 44-19-28, may require the seller of the boat or vessel to keep such records of the sales to bona fide nonresidents as the tax administrator shall deem reasonably necessary to substantiate the exemption herein provided, including the affidavit of the seller that the buyer represented himself or herself to be a bona fide nonresident of this state and of the buyer that he or she is a nonresident of this state.

(32) From the sale, storage, use, or other consumption in this state of items for not more than twenty dollars ($20.00) each by nonprofit Rhode Island eleemosynary organizations, for the purposes of youth activities which the organization is formed to sponsor and support; and by accredited elementary and secondary schools for the purposes of the schools or of organized activities of the students enrolled therein.

(33) Farm equipment. For the sale and from the storage or use of machinery and equipment which are used directly for commercial farming and agricultural production; including but not limited to tractors, ploughs, harrows, spreaders, seeders, milking machines, silage conveyors, balers, bulk milk storage tanks, trucks with farm plates, mowers, combines, irrigation equipment, greenhouses and greenhouse coverings, graders and packaging machines, tools and supplies and other farming equipment, including replacement parts, appurtenant to or used in connection with commercial farming and tools and supplies used in the repair and maintenance of farming equipment. "Commercial farming" means the production within this state of agricultural products, including but not limited to field or orchard crops, livestock, dairy, poultry, or products thereof, where the production provides at least two thousand five hundred dollars ($2,500.00) in annual gross sales to the farm operator, whether an individual, a group, a partnership, or a corporation. This exemption shall apply even if the same equipment is used for ancillary uses, or is temporarily used for a non-farming or a non-agricultural purpose.

(34) Compressed air. From the sale and from the storage, use, or other consumption in the state of compressed air.

(35) Flags. From the sale and from the storage, consumption, or other use in this state of United States, Rhode Island flags or POW-MIA flags.

(36) Motor vehicle and adaptive equipment to certain veterans. From the sale of a motor vehicle and adaptive equipment to and for the use of a veteran with a service connected loss of or the loss of use of a leg, foot, hand, or arm, or any veteran who is a double amputee, whether service connected or not. The motor vehicle must be purchased by and especially equipped for use by the qualifying veteran. Certificates of exemption or refunds of taxes paid shall be granted under such rules or regulations as the tax administrator may prescribe.

(37) Textbooks. From the sale and from the storage, use, or other consumption in this state of textbooks by an "educational institution" as defined in subdivision (18) of this section and as well as any educational institution within the purview of section 16-63-9(4) and used textbooks by any purveyor.

(38) Tangible personal property and supplies used in on-site hazardous waste recycling, reuse, or treatment. From the sale, storage, use, or other consumption in this state of tangible personal property or supplies used or consumed in the operation of equipment, the exclusive function of which is the recycling, reuse, or recovery of materials (other than precious metals, as defined in subdivision (24)(ii) of this section) from or the treatment of "hazardous wastes", as defined in section 23-19.1-4, where the "hazardous wastes" are generated in Rhode Island solely by the same taxpayer and where the personal property is located at, in, or adjacent to a generating facility of the taxpayer in Rhode Island. The taxpayer shall procure an order from the director of the department of environmental management certifying that the equipment and/or supplies as used, or consumed, qualify for the exemption hereunder. If information relating to secret processes or methods of manufacture, production, or treatment is disclosed to the department of environmental management only to procure an order and is a "trade secret" as defined in section 28-21-10(b), it shall not be open to public inspection or publicly disclosed unless disclosure is otherwise required under chapter 21 of title 28 or chapter 24.4 of title 23.

(39) Promotional and product literature of boat manufacturers. From the sale and from the storage, use, or other consumption of promotional and product literature of boat manufacturers shipped to points outside of Rhode Island which either; (i) accompany the product which is sold, (ii) are shipped in bulk to out-of-state dealers for use in the sale of the product, or (iii) are mailed to customers at no charge.

(40) From the sale and from the storage, use, or other consumption in this state of eligible food items payment for which is properly made to the retailer in the form of U.S. government food stamps issued in accordance with the food stamp act of 1977, 7 U.S.C 2013 et seq., as amended.

(41) Transportation charges. From the sale or hiring of motor carriers as defined in section 39-12-2(1) to haul goods, when the contract or hiring cost is charged by a motor freight tariff filed with the Rhode Island public utilities commission on the number of miles driven or by the number of hours spent on the job.

(42) Trade-in value of boats. From the sale and from the storage, use, or other consumption in this state of so much of the purchase price paid for a new or used boat as is allocated for trade-in allowance on the boat of the buyer given in trade to the seller or of the proceeds applicable only to the boat as are received from an insurance claim as a result of a stolen or damaged boat, towards the purchase of a new or used boat by the buyer.

(43) Equipment used for research and development. From the sale and from the storage, use, or other consumption of equipment used predominantly for research and development purposes by a qualifying firm. For the purposes of this subdivision, "qualifying firm" shall mean a business for which the use of research and development equipment is an integral part of its operation, and "equipment" shall mean scientific equipment, computers, software, and related items.

(44) Coins. From the sale and from other consumption in this state of coins having numismatic or investment value.

(45) Farm structure construction materials. Lumber, hardware and other materials used in the new construction of farm structures, including production facilities such as, but not limited to, farrowing sheds, free stall and stantion barns, miling parlors, silos, poultry barns, laying houses, fruit and vegetable storages, rooting cellars, propagation rooms, greenhouses, packing rooms, machinery storage, seasonal farm worker housing, certified farm markets, bunker and trench silos, feet storage sheds, and any other structures used in connection with commercial farming.

(46) Telecommunications carrier access service. Carrier access service or telecommunications service when purchased by a telecommunications company from another telecommunications company to facilitate the provision of telecommunications service.

(47) Boats or vessels brought into the state exclusively for winter storage, maintenance, repair or sale. Notwithstanding the provisions of sections 44-18-10, 44-18-11 and 44-18-20, the tax imposed by section 44-18-20 shall not be applicable for the period commencing on the first day of October in any year to and including the 30th day of April next succeeding with respect to the use of any boat or vessel within this state exclusively for purposes of (i) delivery of such vessel to a facility in this state for storage, including dry storage and storage in water by means of apparatus preventing ice damage to the hull, maintenance or repair; (ii) the actual process of storage, maintenance or repair of such boat or vessel; or (iii) storage for the purpose of selling said boat or vessel.

(48) From the sale and from the storage, use or other consumption in this state of tangible personal property used to display any jewelry product, provided, that title to said jewelry display product is transferred by the jewelry manufacturer or seller and that said jewelry display product is shipped out of state for use solely outside the state and is not returned to the jewelry manufacturer or seller.

(49) Boats or vessels generally. Notwithstanding the provisions of this chapter the tax imposed by section 44-18-20 and section 44-18-18 shall not apply with respect to the sale and to the storage, use or other consumption in this state of any new or used boat. Provided, however that the exemption provided for in this subsection shall not apply after October 1, 1993 unless prior to October 1, 1993 the federal ten percent (10%) surcharge on luxury boats is repealed.

(50) Regulated investment companies interstate toll-free calls. Notwithstanding the provisions of this chapter, the tax imposed by this chapter shall not apply to the furnishing of interstate and international, toll-free terminating telecommunication service that is used directly and exclusively by or for the benefit of an eligible company as defined herein; provided further, that such eligible company shall employ on average during the calendar year no less than five hundred (500) full-time equivalent employees as that term is defined in section 42-64.5-2. For purposes of this section, an "Eligible Company" means a "regulated investment company" as that term is defined in the Internal Revenue Code of 1986, as amended" or a corporation to the extent such service is provided, directly or indirectly, to or on behalf of a regulated investment company, an employee benefit plan, a retirement plan or a pension plan.

(51) Mobile and manufactured homes generally. From the sale and from the storage, use, or other consumption in this state of mobile and/or manufactured homes as defined and subject to taxation pursuant to the provisions of chapter 31-44 of the general laws.

{ADD (52) Alternative fuel. From the sale and from the storage, use, or other consumption in this state of alternative fuel, as defined pursuant to the Energy Policy Act of 1992 (P.L. 102-486, Sec. 301 (42 U.S.C. 13211)), from January 1, 1998 to December 31, 2002.

(53) Alternative fueled vehicles. From the sale and from the storage, use or other consumption in this state, from January 1, 1998 to December 31, 2002, of (1) so much of the purchase price paid for a new dedicated alternative fueled vehicle as is allocated to the incremental cost of purchasing a new dedicated alternative fueled vehicle; or (2) or so much of the purchase price paid for a converted gasoline or diesel-fueled motor vehicle as is allocated to the cost of conversion; and (3) all costs associated with the construction of filling stations dispensing alternative fuel and motor vehicle electric recharging stations. "Alternative fuel" and "alternative fueled vehicle" shall be defined pursuant to the Energy Policy Act of 1992 (P.L. 102-486, Sec. 301 (42 U.S.C. 13211)). "Incremental costs" shall mean the increase to the sale price of an alternative fueled vehicle, above the sale price of a comparable motor vehicle similar in all other respects but for the equipment necessary to render it an alternative fueled vehicle, which increased sale price is attributable to such vehicle being equipped to render it an alternative fueled vehicle. ADD}

SECTION 5. Title 44 of the General Laws entitled "Taxation" is hereby amended by adding thereto the following chapter:

{ADD 44-39.2-1. Definitions. -- ADD} {ADD As used in this chapter, the following terms shall have the following meanings:

(b) "Incremental costs" means the increase to the sale price of an alternative fueled vehicle, above the sale price of a comparable motor vehicle similar in all other respects but for the equipment necessary to render it an alternative fueled vehicle, which increased sale price is attributable to such vehicle's being equipped to render it an alternative fueled vehicle. ADD}

{ADD 44-39.2-2. Tax credits for businesses. -- ADD} {ADD (a) There shall be allowed as a credit against the tax liability imposed against a taxpayer pursuant to chapter 11 of this title, or chapter 30 of this title, with respect to income years of such taxpayer commencing on or after January 1, 1998, and prior to January 1, 2003, an amount equal to fifty percent (50%) of the capital, labor and equipment costs incurred by such taxpayer directly for the construction of any filling station or improvements to any existing filling station in order to provide alternative fuel or for the construction of any recharging station or improvements to any existing recharging station in order to provide for the recharging of electric vehicles.

(d) In the case where the credit allowed by this chapter exceeds the amount of tax liability imposed against a taxpayer pursuant to chapter 11 of this title, or chapter 30 of this title, and to the extent the taxpayer has not transferred or assigned its credits pursuant to subsection (c) of this section, the taxpayer may carry forward such unused credit or any unused portions thereof and apply the credit to its tax liability for any one (1) or more of the succeeding five (5) years. ADD}

{ADD 44-39.2-3. Repeal. -- ADD} {ADD The provisions of this chapter shall expire on and are hereby repealed on January 1, 2003. ADD}

SECTION 6. This act shall take effect upon passage and all of the provisions thereof are repealed on January 1, 2003.