Senate Democrats appear set to shrink their sales tax increase as part of a slimmed down tax package to be voted on as early as Friday.
From what I understand, Senate Democrats will propose a 0.25 percent hike in the state’s portion of the sales tax, down from the three-tenths of a penny in their original proposal.
Senate Democrats also are apparently ready to hike the B&O tax rate on a greater number of professional services to mirror what is in the House Democrats tax package.
If these two steps occur, the Senate package would drop from $890 million to something closer to the reported $800 million target of the two chambers. The tax package of House Democrats is presently at around $690 million.
Today, I also heard some Senate Democrats would be OK with a sales tax increase of two-tenths of a penny if it would help seal a deal to go home. That step alone would carve about $100 million from the Senate package.
Meanwhile, Senate Democrats are getting pressed to accept another House proposal to raise $67 million by closing a tax exemption allowing banks to not pay taxes on interest earned from first mortgages.
Under the current proposal, taxes would be applied to first mortgage interest in excess of $100 million. The Washington Bankers Association has told lawmakers this week that it will affect all national banks plus two mid-sized community banks.
Today, Gov. Chris Gregoire confirmed she has suggested to House Speaker Frank Chopp and Senate Majority Leader Lisa Brown they consider raising the threshold to $120 million.
This would protect the two smaller banks (along with other community banks) and maybe ease opposition from senators now opposed to ending this exemption.
One of these is Sen. Jean Berkey, D-Everett. On Friday, the Rebuilding Our Economic Future coalition plans to bring the issue into her district via an ad in The Herald. (They sent me a copy which I’ve attached as a PDF)
I would suggest this ad is intended to inform her constituents and generate a few calls to the senator’s office.
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