The state should be directly involved in an effort by many other states to collect sales taxes on purchases citizens make outside Washington. In September, voters seemed to put...
The state should be directly involved in an effort by many other states to collect sales taxes on purchases citizens make outside Washington.
In September, voters seemed to put the kibosh on tinkering with the state’s sales tax when they resoundingly defeated ideas from a gubernatorial candidate.
That doesn’t change the fact the state’s tax revenues are eroding with the growing popularity of catalog and Internet sales. Washington is expected to lose about $483 million in tax revenues on purchases citizens make out of state this year. Compare that with the $500 million in tax increases Gov. Gary Locke has proposed.
The Legislature must staunch the revenue hemorrhage by becoming a compliant member in the Streamlined Sales Tax Project, a collaboration among 41 states. The idea is to synchronize state sales-tax laws so the tax can more easily be collected.
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Some major retailers have agreed voluntarily to collect the tax if a critical mass of states are compliant, and Washington could put the group over the threshold.
That could bring in $30 million to the state in the next biennium, with more to come. The more participants, the more likely Congress is to mandate collections nationwide.
Washington has made all necessary changes to be compliant, but one. The challenge is settling a feud between cities some of which stand to gain and some to lose under a necessary change in the law.
Now, local sales tax goes to the jurisdiction from which an item is collected or delivered, such as a warehouse. Washington must change the law to give the revenue to the jurisdiction to which the item is delivered, the buyer’s residence.
Cities such as Kent, with a commitment to a warehousing industry, stand to lose. Others would gain.
Last year, state Rep. Jim McIntire, House Finance Committee chairman, said lawmakers were open to providing mitigation to the cities that stood to lose. The Legislature asked cities to negotiate a mitigation plan. But they failed to agree, differing over how much and for how long.
Lawmakers should not be deterred by the failure. They should move forward with the change in the law and, if necessary, implement their own mitigation plan.