Chopp: Taxes on airplanes, out-of-state companies

OLYMPIA — House Speaker Frank Chopp said Democrats continue examining a wide range of tax changes or “revenue enhancements” to help close the state’s budget gap, but when asked for specifics came up with two.

One is eliminating a tax exemption for private airplanes, which he said goes back to the 1930s. It doesn’t cover commercial planes, and probably wouldn’t be lifted for aircraft like crop dusters, he said. Private planes should be “taxed at the same rate we do for boats above a certain size.”

But there aren’t really that many planes, and it doesn’t go very far to filling the $2.6 billion hole.

Another is rewriting a law struck down last fall by the state Supreme Court regarding the state’s ability to tax companies based in other states with distribution centers in Washington. That “tweak” would bring in $150 million this biennium, he said.

Beyond those two, Chopp said there are “a number” of changes to current tax exemptions that are logical but have to be studied: “We don’t want to cause job loss.”

They are also still looking at extending sales tax to bottled water, soda and candy. No sales tax on bottled water “is sort of a quirk of the law”, he said, adding most people don’t realize they don’t pay sales tax on bottled water.

Big taxes are less likely, he said. The public doesn’t support a state income tax, and a hike to the sales tax is “on the edge of the table” but is considered too regressive.

Yesterday, legislative Republicans called for an exemption from the state Business and Occupation tax for all new businesses, and a three-year phase in after that for small businesses, which they say are hit hard by the tax on gross receipts rather than net. They’d cover the revenue loss by taking that amount out of the Life Sciences Fund, money set aside to spur development of technology.

“It’s certainly fair to look at it,” Chopp said,