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Inslee signs sales tax bill; Vancouver business owners worry about effects

People with Oregon IDs must pay Washington sales tax starting July 1

By , Columbian Business Editor
4 Photos
Taylor Thompson of America the Beautiful Dreamer helps arrange a display of teak outdoor furniture while preparing for customers in the Sifton area.
Taylor Thompson of America the Beautiful Dreamer helps arrange a display of teak outdoor furniture while preparing for customers in the Sifton area. Amanda Cowan/The Columbian Photo Gallery

With Clark County business advocacy groups and more than three dozen Republican legislators arrayed in opposition, Don Thompson held out hope.

Thompson, founder and owner of longtime furniture seller America The Beautiful Dreamer, had hoped Gov. Jay Inslee might announce Tuesday his own opposition to a bill requiring Washington retailers to charge state sales tax to people with Oregon identification. Instead, in a brief ceremony Tuesday morning in Olympia, Inslee signed ESSB 5997 into law.

“That makes me sick to my stomach,” Thompson said when told the bill was now law.

Beginning July 1, the sales tax exemption for Oregon residents and some others, including Alaska, Montana, Delaware and New Hampshire, will no longer be in effect, according to the provisions of the bill, which was approved in the closing days of the legislative session as part of the two-year state budget.

Starting in January, Oregon residents and others seeking reimbursement for the state’s 6.5 percent sales tax will need to submit an annual application to the Washington Department of Revenue to receive the reimbursement of paid state sales taxes totaling $25 or more. Only one application per calendar year will be allowed.

The state anticipates the change will generate nearly $53 million in fiscal years 2020-21.

There will be no reimbursement of local sales taxes. Vancouver officials said last week that the issue was under study and its anticipated impact on local tax revenue was not known.

The change comes after at least five years of off-and-on attempts to alter or eliminate the sales tax exemption. The previous proposals often featured Washington retailers along the Columbia River saying the exemption was necessary to keep them competitive with Oregon, which has no sales tax. Proponents said the exemption was unfair and a drain on potential money for Washington.

On Monday, 38 Republican legislators signed a letter to Inslee urging him to not sign ESSB 5997, saying the bill would put too many retailers at a disadvantage. Also, the bill could have an adverse effect on replacing the Interstate 5 Bridge and relations between Oregon and Washington legislators, the letter said.

“Angering those legislators by angering their constituents will harm our ability to create a cooperative atmosphere needed to resolve this important transportation issue,” the letter says.

Other groups that sent a letter to Inslee opposing the bill included the Greater Vancouver Chamber of Commerce, Identity Clark County, the Washington Retail Association and the Washington State Auto Dealers Association.

The chamber’s letter, signed by president and CEO John McDonagh, also took a jab at the Legislature.

“Gov. Inslee, I stand ready to fill a room with local merchants who can share with you their concerns directly,” McDonagh wrote, “as the process in the Legislature did not allow for comment during the session. These are businesses who make up the unique fabric of our communities, and it would be disastrous for any of them to close or move their establishments to Oregon.”

The sales tax will not directly affect auto dealers. But Monte Phillips, general manager of Vancouver Auto Group, see residual damage ahead.

The bill’s approval leaves a perception that auto dealers are not exempt, Phillips said. And he’s skeptical that auto dealers’ advertising or social media campaigns will sway enough Oregon shoppers’ opinions that will have been shaped by news stories printed or broadcast about the change.

“It’s a perception problem we’ve already had problems with,” even when retail sales tax was not charged to Oregon residents for any purchase. “This reinforces that perception.”

On the other hand, Phillips said he was grateful to Southwest Washington legislators for shielding the auto industry from additional business and occupation taxes in the recently completed session.

But he sympathized with retailers in the region.

“It’s discouraging for all local businesses here,” he said.

Thompson, who has operated a furniture store in Clark County for nearly 50 years and now has a furniture showroom in the Sifton area, wrote letters to Inslee and several local legislators after the bill was approved in late April. None contacted him, he said Tuesday.

In those communications, he highlighted one point in particular: At least 40 percent of sales are to Oregon residents.

He also wrote in one letter, “The sales tax exemption was one arrow in our quiver.”

On Tuesday, he said his family — three children work in the store and another likely will also do so — have changed their thinking about the store’s future.

“We’re considering our options,” he said. “We are currently shopping for Oregon locations.”

Columbian Business Editor