Changing the state’s nonresident sales tax exemption would hurt Southwest Washington
Following on their budget proposal to raise taxes on Washingtonians by $4.2 billion over the next four years, House Democrats are now looking to turn the state's nonresident sales tax exemption into a yearly remittance program—a move that would seriously jeopardize businesses in Southwest Washington.
This is not a new idea. Over the last two biennia, members of the majority party in the House and Senate have introduced eight pieces of legislation to remove or substantially limit the nonresident sales tax exemption.
Why, you ask?
Proponents say Washington state will bring in $54 million in revenue over the next two years if this policy, which is included in House Bill 2157, becomes law.
We say that's pure fantasy, and are adamantly opposed to making a $54 million gamble with people's livelihoods at a time when we already have record revenues and a $3 billion surplus.
Common sense dictates that when you make something more difficult for people, fewer people will engage in that activity. This policy change would create a massive headache for Oregonians by only allowing them to file for a sales tax refund once per year. That means they would be required to hold onto every receipt from every cross-border purchase for an entire year, a far more burdensome process than what exists now. In addition, they would only get the state portion of the sales tax back, not the local portion.
As a result of these changes, we believe many Oregonians would simply stop coming to Washington to purchase products from our local businesses. That's concerning, especially when you consider that some businesses in Clark County attribute as much as 40% of their sales to this tax incentive.
Furthermore, if the Legislature hinders cross-border competition, you may very well see Washington-based businesses pack up and move their operations to Oregon so they can remain competitive. As a result, Washingtonians who work at those businesses would end up paying Oregon's income tax. Great for Oregon. Not so great for Washington.
In a 2011 performance review of the nonresident sales tax exemption, analysts with the Joint Legislative Audit & Review Committee wrote the following:
“Continuing the preference will continue to support Washington retail establishments by removing the disincentive for nonresidents from no or low sales tax locations to purchase goods in Washington.
“If the exemption were repealed, nonresidents near Portland may be less likely to purchase goods from Washington retailers, as they have access to many of the same goods without the sales tax nearby, in their home state.”
At the end of the day, we're left wondering why anyone representing Washington state would support a policy that discourages Oregonians from spending their money here.
If this exemption is changed, we will almost certainly see local businesses close, jobs lost, and more families struggling to make ends meet here in Clark County. And the problem could be compounded further if a recession comes in the next year or two, as many economists are now predicting.
It's time for Democrats in Olympia to abandon these types of misguided ideas. In the meantime, we will continue holding them accountable and advocating for tax policies that best serve Washingtonians.
Rep. Brandon Vick, R-Vancouver, and Rep. Larry Hoff, R-Vancouver, represent the 18th Legislative District