Washington View: One-stop tax collection makes sense for all cities

By Don Brunell, Columbian business commentator

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photoDon Brunell recently retired as president of the Association of Washington Business.

Regulations are like bricks. One brick doesn't weigh that much, but as you add more bricks, the load gets heavier and heavier until eventually it becomes a crushing burden that slows progress to a crawl.

Complying with one regulation doesn't require that much time and money, but as you add thousands of regulations a year from hundreds of federal, state and local agencies, compliance consumes an ever larger portion of an employer's time and money — money that isn't available to hire or sustain jobs.

Take something as simple as permits.

Imagine you're a sign installer. Before you can install a sign, you have to get a permit. To get a permit, you have to have a business license in the town where you're going to install the sign. So you have to drive to the licensing office, get a license, then go to the permitting agency, fill out the paperwork, stand in line, show them your identification and business license, pay for your permit and drive home.

Now imagine you own a business installing signs for dozens of customers in dozens of cities and towns throughout Washington. Imagine the time and money lost in navigating dozens of different local bureaucracies.

More than 20 years ago, then-Secretary of State Ralph Munro brought the streamlining idea to state government, creating the "One-Stop Business Licensing System." Under Munro's system, the owners of that sign company could go to the Secretary of State's office and get one business license to install signs anywhere in Washington. Unfortunately, only 55 of the more than 200 cities that have city licenses actually participate in the program.

Today, we're fighting a similar battle over collecting business and occupation (B&O) taxes. The state levies a B&O tax, but a variety of cities and towns impose their own versions, as well. If your business operates in a half-dozen different cities, you have to pay each city's tax and license separately.

This is needlessly complicated and costly. Large corporations may have the computer systems and staff to navigate such a complicated system, but small business owners do not.

That doesn't seem to bother some city officials who say that a centralized system "doesn't work for us." The question they fail to ask is, "Does it work for the taxpayer?"

Bill has foes

Former Democratic Gov. Chris Gregoire proposed a one-stop payment center during the 2012 legislative session. The Association of Washington Business, the state's Chamber of Commerce, supported the measure because it would make it easier for businesses to pay the taxes and license fees they owe, but the cities refused to negotiate and killed the bill. The measure was reintroduced this year, but cities including Seattle and Bellevue are fighting back.

In a recent op-ed piece, Seattle City Council President Sally Clark and Bellevue Mayor Conrad Lee claimed a streamlined approach would cost the cities money. Ironically, they're proposing to spend millions to set up their own B&O tax collection system to serve Seattle, Bellevue, Tacoma, Everett and Bellingham.

If consolidating tax collection doesn't save money, then why are they proposing to do just that?

The reality is, streamlining the payment system just makes sense for cities of all sizes. Cities would retain the ability to adjust their individual tax rates, and it will help cash-strapped cities that can't afford to electronically collect and administer local taxes. And it could bring thousands of new taxpayers into the system. When Spokane joined the state's Business Licensing Service, the state Department of Revenue identified more than 5,000 Spokane businesses that weren't on the city's books.

A centralized B&O tax payment center would be easier for taxpayers, more efficient, and it's revenue neutral — meaning it won't cost more money. It's just common sense.

Don Brunell is president of the Association of Washington Business, Washington state's chamber of commerce.