Published: Tuesday, March 2, 2010
House Democrats seek targeted tax increase over sales tax boost
Instead, their plan would close loopholes and tax candy and water
OLYMPIA — Prospects for a statewide sales tax increase appeared to dim Monday while the outlook for higher taxes on candy, bottled water and cosmetic surgery brightened.
House Democrats ended days of intense discussions by unveiling a $758 million tax package tapping wallets of some consumers, professionals and businesses without an across-the-board hike in the sales tax.
Gov. Chris Gregoire promptly endorsed the plan over one offered by Senate Democrats, which does call for boosting the state’s portion of the sales tax for three years.
“I can live with it,” Gregoire said. “It is a much preferable revenue package for me than the Senate.”
Gregoire’s support will surely bring a little pressure on Senate Democrats to consider dropping their desired three-tenths of a penny increase and replacing it with targeted taxes — the approach taken by the governor and House Democrats.
“I hope so. I think a general sales tax increase was a bad idea from Day One,” said Rep. Marko Liias, D-Edmonds.
When Senate Democrats released their $940 million tax proposal last week, Senate Majority Leader Lisa Brown, D-Spokane, said it was a starting position for a caucus that believed a small general tax increase was a fair way of generating revenue. Their plan also provides rebates to poor families to offset some of the financial impact of a higher tax.
There also are senators worried about the political cost in November of raising the sales tax. Talks have been under way to change the Senate tax package.
The House Democrats on Monday called for adding a sales tax on candy, bottled water and cosmetic surgery and increasing taxes paid by lawyers, accountants and lobbyists. Their plan also would boost the cigarette tax by $1 per pack and end nearly a dozen tax exemptions, including ones benefiting airplane owners, banks and out-of-state companies.
Overall, it raises $758 million, which is about $100 million less than assumed in the budget approved last week by the House Ways and Means Committee. The difference would be made up with lottery revenues and a transfer from the Capital Budget.
A hearing on the proposal is set for today. Opposition is expected.
“It’s basically taking taxes from almost any place where you can get them,” said Rep. Barbara Bailey, R-Oak Harbor, who serves on the House Ways and Means Committee.
Two industries targeted may not fight the Democrats.
The Washington Beverage Association said Monday it will not oppose efforts to start charging sales tax on bottled water while lobbyists for lawyers have told Democrats they won’t battle them on an increase in the rate of business tax they must pay.
Gregoire and Democratic legislative leaders are wrestling with how best to patch a $2.8 billion hole in the state budget.
Their respective budget proposals cut spending and tap reserves but rely on hundreds of millions of dollars in new revenue to be balanced. That money is intended to pay for education, human services and health care programs.
Gregoire offered a $605 million tax package last month, and Senate Democrats followed with their $940 million proposal.
The lack of a House proposal had many around the Capitol pessimistic that the Legislature could finish the session March 11 as scheduled. For some, the mood brightened Monday.
“I think this helps move the process forward,” Liias said. “We’re making progress.”
Gregoire suggested “the way home” for legislators is through a wedding of the House tax plan and Senate budget proposal.
“I am not preparing for a special session,” she said.
Reporter Jerry Cornfield: 360-352-8623; jcornfield@heraldnet.com
House Democrats ended days of intense discussions by unveiling a $758 million tax package tapping wallets of some consumers, professionals and businesses without an across-the-board hike in the sales tax.
Gov. Chris Gregoire promptly endorsed the plan over one offered by Senate Democrats, which does call for boosting the state’s portion of the sales tax for three years.
“I can live with it,” Gregoire said. “It is a much preferable revenue package for me than the Senate.”
Gregoire’s support will surely bring a little pressure on Senate Democrats to consider dropping their desired three-tenths of a penny increase and replacing it with targeted taxes — the approach taken by the governor and House Democrats.
“I hope so. I think a general sales tax increase was a bad idea from Day One,” said Rep. Marko Liias, D-Edmonds.
When Senate Democrats released their $940 million tax proposal last week, Senate Majority Leader Lisa Brown, D-Spokane, said it was a starting position for a caucus that believed a small general tax increase was a fair way of generating revenue. Their plan also provides rebates to poor families to offset some of the financial impact of a higher tax.
There also are senators worried about the political cost in November of raising the sales tax. Talks have been under way to change the Senate tax package.
The House Democrats on Monday called for adding a sales tax on candy, bottled water and cosmetic surgery and increasing taxes paid by lawyers, accountants and lobbyists. Their plan also would boost the cigarette tax by $1 per pack and end nearly a dozen tax exemptions, including ones benefiting airplane owners, banks and out-of-state companies.
Overall, it raises $758 million, which is about $100 million less than assumed in the budget approved last week by the House Ways and Means Committee. The difference would be made up with lottery revenues and a transfer from the Capital Budget.
A hearing on the proposal is set for today. Opposition is expected.
“It’s basically taking taxes from almost any place where you can get them,” said Rep. Barbara Bailey, R-Oak Harbor, who serves on the House Ways and Means Committee.
Two industries targeted may not fight the Democrats.
The Washington Beverage Association said Monday it will not oppose efforts to start charging sales tax on bottled water while lobbyists for lawyers have told Democrats they won’t battle them on an increase in the rate of business tax they must pay.
Gregoire and Democratic legislative leaders are wrestling with how best to patch a $2.8 billion hole in the state budget.
Their respective budget proposals cut spending and tap reserves but rely on hundreds of millions of dollars in new revenue to be balanced. That money is intended to pay for education, human services and health care programs.
Gregoire offered a $605 million tax package last month, and Senate Democrats followed with their $940 million proposal.
The lack of a House proposal had many around the Capitol pessimistic that the Legislature could finish the session March 11 as scheduled. For some, the mood brightened Monday.
“I think this helps move the process forward,” Liias said. “We’re making progress.”
Gregoire suggested “the way home” for legislators is through a wedding of the House tax plan and Senate budget proposal.
“I am not preparing for a special session,” she said.
Reporter Jerry Cornfield: 360-352-8623; jcornfield@heraldnet.com
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