OLYMPIA – Gov. Jay Inslee’s state budget proposals this week contain details that would hurt consumers and retailers and test the state’s fragile economy.
The Washington Retail Association hopes the more conservative state Senate will defeat two of the governor’s proposals in particular.
Inslee’s proposed repeal of a sales tax exemption that Washington State offers to some out-of-state shoppers would hurt the state, consumers and retailers more than it would help.
Removing the exemption would erase the incentive out-of-state shoppers have to shop in Washington State. Many come from Oregon, which has no sales tax. The resulting loss of sales would threaten retail jobs just as our state is beginning a slow recovery from the recession. Residents of six states (Oregon, Colorado, Alaska, Montana, Delaware and New Hampshire) and four Canadian provinces or territories qualify for the non-resident sales tax exemption, which applies to residents where sales tax rates are below 3 percent.
“In fact, in the name of collecting a few more sales taxes, we would be prolonging the economic recovery,” said Jan Teague, President/CEO of the Olympia-based Washington Retail Association. “A repeal will plain and simply take money out of the cash registers of retailers in our state and likely cause layoffs as some retailers along the Oregon border try to stay in business.”
Teague noted that a repeal of the sales tax exemption would result in two other negative ripple effects.
“All sorts of other businesses depend on customer traffic generated by retail sales,” Teague said. “The sales tax incentive is key to strong retail sales for many communities. When those out of state shoppers stay home, they don’t buy gas here or eat in Washington restaurants. All of that is lost business for the state and that translates into jobs in the long run.”
Raising the price for out-of-state shoppers also would encourage many of them to shop online, where sellers often do not collect sales taxes. While online shopping benefits consumers in lower prices, it hurts traditional brick and mortar retailers who collect sales taxes.
Inslee’s proposal also increases Business & Occupation tax rates for retailers that will cost all of them more to do business in our state. When government increases the cost of doing business, companies often are forced to find savings elsewhere. Often, this results in layoffs.
“All in all, the governor’s proposals are bad ideas for a number of reasons,” Teague said. “They distract from state government’s root problem: overspending beyond its means. State government added nearly a quarter in new spending for every dollar it spent the past decade. The Legislature will be far better off finding ways to spend less rather than finding ways to punish retailers and their customers. Our hope is that the state Senate’s more moderate and conservative members will put these ideas to rest before they result in any costly consequences for the state.”
The Washington Retail Association represents retailers throughout the state and nation who operate 2,800 storefronts across Washington.
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