Fee, Tax Trims Cut Wide Swath For Business House Finance Panel Considered 183 Cuts
From coin-operated car washes to beer distributors and soda pop makers, it seems everyone’s getting a piece of the $400 million tax cuts being doled out by lawmakers.
Many business interests are close to clinching deals they’ve wanted for years. The list of fee and tax cut bills in play as of Friday - the “wowza sheet,” as Rep. Hans Dunshee, D-Snohomish, calls it - tops 70.
That’s nothing. Rep. Brian Thomas, R-Renton, chairman of the House Finance Committee, said his committee considered 183 fee and tax cut bills this session, worth a total of more than $1 billion.
“We didn’t do everything that came flapping at the window.”
But lawmakers held it pretty wide open. So bent were lawmakers on cutting taxes this session they even slashed a tax approved at the polls just three years ago by two-thirds of voters statewide.
Lawmakers voted to cut the tax on soda pop syrup from $1 to 50 cents a gallon. Anti-drug and crime prevention programs funded by the tax will still be paid for. But now money will come out of the general fund, at a cost of $7.7 million in the next two years alone.
Lawmakers also cut the beer tax, which will cost the general fund about $9 million.
The beer tax is still scheduled to go up in July. But lawmakers cut the increase from $2.39 a barrel to 91 cents.
The syrup tax and beer tax bills now go to Democratic Gov. Gary Locke for consideration.
An exemption from the business and occupation tax on wholesale car auctions has already been signed into law, at a cost of $825,000 in the coming biennium.
Locke has also signed a reduction of the business and occupation tax rate to pre-1993 levels for lawyers, consultants, bankers and other providers of professional services.
That tax reduction will cost $94.3 million in the next two years and $239 million in the budget after that.
Sen. James West, R-Spokane, chairman of the Senate Ways and Means Committee, said the business and occupation tax rollback is a matter of fairness.
“That tax was raised during a financial emergency and the crisis is past.” The tax was hiked in 1993 to help close a budget deficit.
Businesses also won their battle to overturn the ability of county assessors to tax businesses for intangible property, such as a firm’s good name or trademark.
Opponents predicted a giant tax shift to homeowners from business because of the ban on taxing intangibles, such as a company name.
Democratic opponents of the legislation argued it will provide tax cuts for big businesses from The Boeing Co. to McDonald’s.
King County Assessor Scott Noble predicted at least a 10 percent reduction in the tax base of commercial property and a shift of the burden to homeowners. He estimated the cost of the tax shift to homeowners at $100 a year, about five times the size of the property tax cut the GOP enacted for homeowners this session.
“Nonsense,” said Tom Dooley of the Association of Washington Business, which lobbied hard for the tax cut. “That’s just the assessors trying to create a fear factor.”
The intangibles tax prohibition is before the governor for signature. If it becomes law it will cost the general fund $589,000 in the coming biennium and about $6 million in the next one.
Retailers are hoping for a $30 million break to reimburse them for doing the state’s job of collecting sales tax on purchases. And a more than $1 million break is in the works for coin-operated car washes, drawing fire from some. “See if there’s any drop in the price because of the tax cut. I don’t think so,” said Sen. Lisa Brown, D-Spokane.
Thomas called that break “silly. It’s one of those that happen because people have been around asking for it and beating on us so long that you just get sick of hearing it.”
Another microbreak affects only one company, an aluminum casting firm in Wenatchee, that wanted its business and occupation classification changed. The cost to taxpayers: $38,000.
And there’s a bill that makes the state pay the same interest rate on its refunds as taxpayers pay the state when they owe back taxes.
Insurance companies cashed in on a bill that would require taxpayers to bail out insurance companies that go belly-up.
That bill is estimated to cost taxpayers about $5 million.
Advocates for the poor lamented that with all the money given back to businesses this session, thousands more people could be given health insurance through the state’s Basic Health Plan for the working poor. And tightening eligibility standards for state programs for the poorest of the poor could have been avoided.
“It shows who they are looking out for,” said George Manalo-LeClair, an advocate for children’s programs.
“People know this place is bought and paid for by business,” said Dunshee. “With the money involved down here, you just don’t bet against the big boys.”
In a testy floor speech Friday, Rep. Tom Huff, R-Gig Harbor, chairman of the House Appropriations Committee, said critics don’t understand where money comes from. “It’s another business bashing day,” said Huff. “I’m a little miffed that when people talk about business they forget they are employers, and that they provide the money for us to come down here and spend $19.1 billion budgets.”
, DataTimes MEMO: This sidebar appeared with the story: TAX CUTS Tax cuts that have been signed into law include: 4.7 percent reduction in state share of the property tax. Cost: $26.4 million. Roll back business and occupation tax rates on professional services to pre-1993 levels. Cost: $94.3 million. Exempt wholesale car auctions from the business and occupation tax. Cost: $825,000. Other tax cuts awaiting governor’s signature: Cut tax on soda pop syrup in half. Cost: $7.7 million. Reduce scheduled increase in beer tax from $2.39 per barrel to 91 cents. Increase, adopted in 1993, goes into effect July 1. Cost: $9.3 million. A ban on taxing intangible assets of commercial property, such as trademarks or customer loyalty. Cost: $589,000. All costs are to the state general fund for the 1997-1999 budget years. Source: Senate Ways and Means Committee