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The following is presented as part of The Columbian’s Opinion content, which offers a point of view in order to provoke thought and debate of civic issues. Opinions represent the viewpoint of the author. Unsigned editorials represent the consensus opinion of The Columbian’s editorial board, which operates independently of the news department.
News / Opinion / Editorials

In Our View: Sales-tax exemption removal requires close eye

The Columbian
Published: May 24, 2019, 6:03am

Note to Oregon shoppers: Clark County is still open for business and has plenty of unique, independent stores.

How does that sound? Think it will work? After the Legislature eliminated Washington’s sales-tax exemption for Oregon residents — Gov. Jay Inslee signed the bill Tuesday — many local merchants fear that won’t be enough.

With Oregon having no sales tax, there is little incentive for our neighbors from the south to cross the Columbia River and purchase a couch or a lawn mower or a new pair of shoes. Not when they have to pay Washington’s 6.5 percent state sales tax. Removing the exemption, some retailers say, will turn that river into a wall in the minds of Oregon consumers.

That, obviously, is a concern for border areas such as Clark County. And while the change has been made — it takes effect July 1 — we urge lawmakers to keep a close watch on its impact. If businesses in border counties see a drop in sales that can be traced to a decline in Oregon shoppers, the exemption should be reinstated as quickly as possible.

Lawmakers who approved passage of ESSB 5997 (Democratic Reps. Monica Stonier and Sharon Wylie were the only Southwest Washington legislators to vote in favor) estimate that charging the tax will add more than $50 million to state coffers over the two-year budget cycle. But if local businesses are employing fewer people and paying less in Business & Occupation taxes because of lower receipts and, perhaps, closing up shop or moving to Oregon, it can more than offset the additional sales tax.

For now, the impact of removing the exemption is speculative. And it brings up another issue that state government must address.

Many retailers in the county say much of their business comes from people who use an Oregon driver’s license to avoid Washington’s sales tax. Don Thompson, who owns a furniture outlet in Clark County, told The Columbian that at least 40 percent of his sales are to Oregon residents.

Part of that, however, could be the result of Washington’s lax enforcement of state law requiring residents to register their cars and receive their driver’s licenses in this state. A quick trip around just about any neighborhood in Clark County reveals that many residents prefer to register their vehicles in Oregon, where license tabs are less expensive. Replacing an Oregon driver’s license with a Washington one following a change of residence also can be expensive.

The guess is that many people carrying an Oregon driver’s license are actually Washington residents, a situation that state officials have been reluctant to address. When that is the case, we hope that shoppers will stay close to home and patronize local businesses, regardless of the fact they now must pay sales tax.

There was sharp opposition to removal of the sales-tax exemption. Republican legislators from throughout the state urged Inslee to not sign the bill. So did the Greater Vancouver Chamber of Commerce, Identity Clark County, the Washington Retail Association and auto dealers. Notably, the exemption remains in place for auto sales.

Inslee — and legislators before him — opted not to heed their concerns. We believe that was a mistake, but the more important thing is what happens next. Lawmakers must pay close attention to the result of the removal and, if necessary, must be quick to rectify that mistake.

In the meantime, we remind Oregon residents that Clark County is still open for business. We hope that works.