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Gregoire floats taxes on soda, candy, bottled water

Wed., Feb. 17, 2010, 2:29 p.m.

OLYMPIA – Gov. Chris Gregoire proposed this afternoon a series of tax increases as part of what she calls a “balanced approach” to the worst economic times in more than 60 years. She wants the Legislature to:

• extend the sales tax to candy and gum;

• place an excise tax of 1 cent per ounce on bottled water;

• place an excise tax on soda that amounts to a nickel for a 12 ounce can;

• increase the hazardous substance tax from 0.7 percent to 2 percent, which sources in the oil industry said could raise the price of gasoline by about 5 cents per gallon;

• eliminate business and occupation tax exemptions for sales of gold bullion and syrup used in carbonated beverages, and require corporate directors to pay taxes on the fees they receive for their services.

She also wants the Legislature to make some other changes to the state’s tax code, including an exemption to the business and occupation tax for out-of-state companies that sell directly to consumers. A state Supreme Court case last year said the current exemption for door-to-door sellers like Avon and Mary Kay representatives also covers out-of-state wholesalers like Dot Foods, which cost the state $153 million in the upcoming biennium.

Gregoire told leaders of both parties in both chambers of the Legislature that she still plans to close 10 state institutions as a way of saving $180.5 million. Among those institutions is Pine Lodge Corrections Center for Women in Medical Lake.

Her budget will still cut about $1.8 billion from the state’s projected budget. Between those cuts and some $768 million revenue from new taxes and expected federal programs, the state would be able to close the projected $2.8 billion gap.

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