A bill that would make Oregonians shopping in Southwest Washington pay some retail sales tax is being considered by Washington lawmakers in an attempt to raise about $18 million in state revenue.
If the proposal passes, out-of-state shoppers would pay the retail sales tax — 8.2 percent in Vancouver, for example. Later they could apply for a refund of the state’s portion of the tax, which is 6.5 percent. They would still have to pay the local sales tax, which in Vancouver totals 1.7 percent.
To get a refund, shoppers would apply online through a process that proves their out-of-state residency. They would only apply once a year for their refunds and the refunds would have to total at least $25.
The legislation, Senate Bill 6061, was proposed by Sen. Cheryl Pflug, R-Maple Valley. She said it is expected to raise state revenue by creating a minor inconvenience for shoppers and also by cutting down on tax fraud that sometimes occurs at stores. Now shoppers need only to show Oregon ID to receive a tax exemption.
Pflug said her bill is similar to the rules in British Columbia, Canada. She said she hopes her legislation can help with the state’s $1.5 billion budget shortfall.
“Seventeen million here, $20 million there — pretty soon you have real money,” Pflug said.
The bill received a public hearing last week before the Senate’s Ways and Means committee, where testimony was mixed. Some praised the bill for raising revenue rather than cutting during a tough economic time for the state. Others said they worried the bill would harm border cities such as Vancouver because it would discourage Oregonians from crossing the border to shop.
Committee member Sen. Joseph Zarelli, R-Ridgefield, asked whether the bill would affect auto sales in Southwest Washington.
Scott Hazelgrove of the Washington State Auto Dealers Association, who testified on the bill, noted that auto sales are not included in the retail sales tax mentioned in the legislation. The bill also would not change the taxes on service purchases, such as hotel stays or meals bought at a restaurant.
Hazelgrove spoke in opposition to the bill, however, because he said shoppers might not realize that auto sales are classified differently for taxes. He also said the proposal would discourage nonresident shopping in general and that a person would need to spend about $384 to become eligible for a $25 refund.
Mark Johnson of the Washington Retail Association testified against the bill, saying that some Washington businesses along the Oregon border receive up to 60 percent of their business from Oregonians.
Seth Dawson of the group Common Ground for Children and Families testified in support of the bill. He said he lobbies to support any legislation that would raise state revenue without cutting funding to government programs.
“This is a difficult year for everybody,” Dawson said. “This is one example of you doing exactly what we’re asking you to do. … I hope there will be others.”
As of Tuesday, the bill had not been scheduled for an executive hearing, where committee members vote on which pieces of legislation should advance out of committee. By Friday, most bills not moving out of the committee in which they were introduced will die.