A legislative attempt to eliminate the sales tax exemption for out-of-state residents appears dead for the 2011 session.
The language eliminating the tax break was stripped from a larger bill in the House Ways and Means Committee on Wednesday. Vancouver merchants opposed the provision, saying it would discourage their Oregon customers from crossing the river to shop in Vancouver.
“That’s good news,” said Kelly Parker, president of the Greater Vancouver Chamber of Commerce. “We’re grateful to legislators who are listening to the concern of businesses and understand that this repeal would hurt the local economy.”
Rep. Jim Moeller, D-Vancouver, was the only Clark County legislator among 48 co-sponsors of House Bill 2078, the measure that included the language doing away with the exemption. Moeller has consistently argued for eliminating a number of tax exemptions in order to protect state funding for education and social services in the 2011-13 budget.
”Quite honestly, I don’t think we can go home and show our faces and say that we didn’t even try,” he said Wednesday.
But Moeller conceded that supporters would have been unlikely to muster the two-thirds vote required to eliminate the tax exemption even if the measure had come up for a vote on the House floor.
“It wouldn’t come close even with 48 sponsors,” Moeller said. The House has 98 representatives.
Initiative 1053, passed by voters last November, requires a two-thirds vote of each legislative chamber to raise taxes. The measure has been interpreted to require a two-thirds vote on eliminating tax exemptions as well.
Some Democratic lawmakers are considering returning to voters this November with a referendum asking them, in effect, whether they meant to require a two-thirds vote on eliminating tax exemptions.
Last week, a coalition of Southwest Washington business leaders wrote an open letter to legislators urging them to retain the tax break for out-of-state residents.
“Out-of-state business from our neighbors in Oregon is welcomed and, in fact, some of our local companies report 18 to 25 percent of their business comes from Oregon,” wrote the Southwest Washington Association of Business Leaders. Doing away with the exemption while the state is still struggling to climb out of recession “will harm businesses in every Washington community near the Oregon state line,” they wrote.
State Rep. Tim Probst, D-Vancouver, was among local legislators who lobbied to remove the language from HB 2078.
What remains of the bill that passed out of committee Wednesday is language that would eliminate a state tax break for Wall Street banks that operate in 10 or more states. If it were enacted, the money saved would be dedicated to funding class-size reductions in grades K-3.
State Rep. Ed Orcutt, R-Kalama, the ranking Republican on House Ways and Means, said he would not support repeal of any of the hundreds of tax exemptions on the books.
“We already had the debate on the tax exemptions last year,” he said. “Some of these things were in various tax packages and then got taken out. For us to have this debate again is ridiculous, especially since the passage of (Initiative) 1053. The citizens very clearly said, ‘Balance this budget within existing revenue.’”
