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Sales tax exemption reform could affect Washington businesses

Washington businesses may soon experience decreased sales due to new state tax legislation. Under Senate Bill 5997, which narrowly passed over the last weekend of April, Oregonians shopping in Washington may no longer be able to claim sales tax exemptions at the register by simply presenting their IDs. Washington business owners are concerned that this change in policy will drastically affect their business as fewer Oregonians will be willing to make purchases in Washington.

 

What does the bill do?

Previously, Washington legislation tried to incentivize Oregon consumers to make purchases across the border by exempting sales tax at the register. If signed into law, the new bill would not completely bar Oregon citizens from Washington sales tax; it would not allow them to forego the cost at the time of purchase.

To avoid sales tax, Oregonians under the new legislation must file for a yearly tax refund with the state of Washington for any purchases made in the state. However, it is estimated that only about 10% of all Oregonians making purchases in Washington would file for the return.

If signed into law by Gov. Jay Inslee, the proposal would garner an estimated $54 million to the state's general fund.

Washington retailers concerned

Many Washington retailers are opposing the bill, claiming that it is unreasonable to expect Oregonians to keep their receipts and file for the rebate. They argue that it is more likely for consumers to avoid making purchases in Washington stores altogether.

This bill could add stress to an already struggling retail market. Some Washington businesses say that as many as 25% of their customers come from south of the state border, and several business owners claim that the bill could be catastrophic to their businesses’ vitality.

Looking forward, Washington retailers will want to keep a close eye on the governor’s stance on the bill. If he doesn’t sign it into law, the legislation could take longer to implement or be may never go into effect.

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