Saturday, April 16, 2011
As state government looks at trimming spending on education and social services in an effort to bridge the $5.1 billion gap between projected revenue and projected spending, protesters outside the Capitol in Olympia are calling for an end to tax breaks.
Their chants are not without merit. But simply ending tax breaks as some sort of a revenue panacea would likely be counterproductive.
Yes, tax breaks should always be reviewed and decisions have to be made on a case-by-case basis. The fact is breaks for businesses are often used as incentive to attract or retain businesses, to stimulate a sector of the economy or to offset a flaw with the tax system.
Still, tax policy should be fair and consistent. It's certainly possible tax exemptions are being offered that are not fair. We would urge lawmakers to continue to review those tax breaks for equity and to find more revenue.
A few Democrats in the House have introduced a proposal to end a pair of tax breaks they claim will garner about $170 million.
One is to close a business and occupation tax exemption for corporate banks, the other is a sales tax exemption for out-of-state shoppers. We aren't certain tinkering with the B&O tax breaks is a good idea given the current economic climate.
However, we embrace the concept of doing away with the sales tax exemption for out-of-state shoppers. And we say that knowing folks who live in Milton-Freewater and other nearby Oregon communities would not be happy about it.
It's a matter of fairness. When people living in Washington work in Oregon they have to pay that state's income tax. And when Washington travelers stay in an Oregon motel they have to pay hotel (or tourist) taxes assessed.
A major reason out-of-sate shoppers were granted the exemption is to make it easier for businesses on the border to attract customers. It was particularly important for the Vancouver area, which is near Oregon and its largest city, Portland.
Shopping trends have changed over the years, and not just because of the Internet. People are going to certain stores and shopping centers whether they have to pay sales tax or not.
We don't believe Walla Walla stores would see a significant drop in sales. The Oregonians who shop here do so for variety and convenience.
Sure, shopping habits are going to change a little, but not significantly. The positive is that Washington state will see millions more in tax revenue.
An added benefit locally is this would result in a significant amount of needed cash to the cities of Walla Walla and College Place and Walla Walla County. Local governments, like the state, are having serious budget issues.
Putting the sales tax on goods purchased by Oregon shoppers is not a solution to the current budget troubles, but it is a prudent step in helping fund education and other important state programs.