Inslee may embrace extending temporary taxes

Democratic Gov. Jay Inslee, on his first full day in office, said he may support extending two taxes set to expire in June if it helps balance the budget or satisfy a court order to better fund public schools.

And Inslee rejected the idea that by continuing the surcharge in the business and occupation tax for certain services and a beer tax he is violating a campaign pledge to not increase taxes.

“I do not believe we would be increasing taxes if we extend the existing tax rates in that regard. And the reason I believe that is it’s true,” he said at a news conference.

“They do not raise taxes on people over the existing level that in fact are being paid today,” he said. “Since they do not increase taxes they’re not a tax increase. That’s a numerical, mathematical conclusion that Huskies and Cougars, no matter where you went to school, can agree with on a mathematical basis.”

Jason Mercier, director, of the Center for Government Reform of the Washington Policy Center, disagreed.

“Under state law, breaking the promise to sunset those temporary tax increases would qualify as a tax increase and trigger the protections of the state’s supermajority for taxes law,” he wrote in an email.

“While the Governor did not officially commit to breaking the promise made to those currently subject to these “temporary tax increases,” extending them would qualify as a tax increase under the law and run afoul of what the voters were promised,” he wrote.

On June 30, a 0.3 percent increase to the business and occupation tax paid by lawyers, accountants and others and a 50-cent-per-gallon tax on beer are supposed to expire. Lawmakers approved the temporary hikes in 2010 to help plug a budget gap.

Keeping them in place could bring in around $650 million in the next two-year budget.

Inslee said a whole bunch more on the matter of these taxes. Here is a transcription of his comments.

I favor a good budget that we eventually will have that will be balanced that will move forward to the extent humanly possible on school funding and will not increase taxes as much as humanly possible.

I do not believe we would be increasing taxes if we extend the existing tax rates in that regard. And the reason I believe that is it’s true. We would not be increasing taxes for consumers in that regard. That’s something that as an economics major from the University of Washington is pretty clear to me and I think people will come to understand that over time.

I don’t want to foreclose the possibility of those being on the table for discussion. I am not proposing it right now. I think it’s something that people ultimately are probably are going to consider.

What I am saying is that those proposals, should we, in the fullness of time, conclude they’re necessary for satisfying the McCleary decision or having a balanced budget and I have not made that decision yet.

But should the Legislature reach that conclusion and I eventually agree with it, what I am going to do is tell the truth which is these do not increase taxes. They do not raise taxes on people over the existing level that in fact are being paid today. And since they do not increase taxes, they’re not a tax increase. That’s a numerical, mathematical conclusion that Huskies and Cougars, no matter where you went to school, can agree with on a mathematical basis.

Again, I want to reiterate I have not reached a conclusion that that’s a route people will have to go. But I do think it’s important not to foreclose them for legislators to consider.

As I said I am not proposing or supporting them today. What I am saying is I am not foreclosing them. Let me reiterate. I am not proposing or advocating to do that today but I want to make sure that I allow the legislators a room to discuss this potential.

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