Thursday, September 23, 2021
Sept. 23, 2021

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In Our View: Put Stale Tax Idea to Rest

Ending sales tax exemption for out-of-state shoppers will hurt local merchants

The Columbian
Published:

As the clown car known as the 2015 Washington Legislature lurches to the end of its second special session, the ideas come spilling out like size 20 leather shoes and a dozen pairs of Bozo’s heavily patched underwear.

Among these retreads: Repealing the sales tax exemption for some out-of-state shoppers, including Oregonians, who buy from Washington businesses.

It’s an idea that just seems to linger, like the stale odor of Saturday night’s fish fry. House Democrats have finally dropped their proposal to institute a capital gains tax, one of the main sticking points in passing a two-year budget. But they continue to insist on closing tax loopholes, including a sales tax exemption for certain nonresidents.

Republicans, of course, are having none of it. First of all, they will tell you, closing a tax loophole is a euphemism for collecting more taxes. And second, there’s little evidence that actually repealing the exemption will result in a significant windfall of cash for the state treasury.

In case you haven’t stood in a Vancouver cashier’s line and seen it in action, here’s how the law works: Residents of Oregon and some other states with low or no sales taxes can flash their driver’s license or government-issued ID, and Washington’s sales tax (8.4 percent in the city of Vancouver) is waived.

The latest gambit is that everyone would pay the sales tax, but certain nonresidents, including Oregonians, could apply for a refund once they pay $25 in taxes. Sounds like visiting Canada, eh?

Ending the exemption would add roughly $50 million to a $38 billion state budget over the next two years. That’s about 0.13 percent.

Kelly Love, president of the Greater Vancouver Chamber of Commerce, has been tracking this issue and thinks even that tiny amount of extra money for the state is an exaggeration.

“Oregonians won’t pump their own gas, and they won’t pay a sales tax,” she said Wednesday. In other words, close the loophole, and Oregon shoppers will likely spend their money south of the Columbia River.

It’s not like Clark County is a shopping mecca for Oregonians. Has anyone else noticed those big electronics and furniture stores off the first Oregon exits on both interstates? Yet 75 percent of the impact of ending the sales tax exemption would be felt in Clark County businesses, Love says.

The Chamber and many in the business community rightly oppose messing with the sales tax exemption. One of the few local legislators who touts it is Rep. Jim Moeller, D-Vancouver. His argument is that so few Oregonians buy here, they won’t bother to change their shopping habits.

Perhaps, but why take a chance on squelching what local retailers report is anywhere between 10 percent and 15 percent of their sales?

Sen. Ann Rivers, R-La Center, offers a more useful perspective as the June 30 budget deadline draws nearer. “I think we need to revisit (tax exemptions,) but the 11th hour is not the time to do it,” she said this week. “The reality is we have $3.5 billion more dollars (than previously anticipated). … We have the money to do what we need to do.”

So, after a 105-day regular legislative session and two 30-day special sessions, let’s do it. Pass a no-new-taxes budget that makes significant new investment in public education and responsibly funds general government. Then pass a reasonable transportation budget that invests in needed projects throughout Washington. And then, finally, climb back into that clown car, and pedal home!

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