B&O Tax Increase on Service Businesses
House Democrats and Governor Inslee propose to permanently extend the 20% percent temporary B&O tax increase on service businesses
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Last week, the House Democratic Caucus announced its plan to raise a variety of business taxes by $1.3 billion next biennium.Â The House Finance Committee last evening announced it plans to hold a hearing on the House Democratic Caucus tax package (HB 2038), which was introduced today.Â Â At the center of the tax package is a proposal to make permanent the temporary 0.3 percent surcharge on business and occupation tax on services enacted in 2010.Â The announcement follows Governor Insleeâ€™s recommendation made last week to extend the temporary B&O tax surcharge permanently, as part of his own $1.2 billion tax-increase package.
If the temporary B&O tax surcharge does not expire at the end of June, as originally promised when it was enacted in 2010, design firms will pay $15 million annually or more in surcharges foreverâ€”thatâ€™s on top of the $75 million annually paid by design firms under the existing 1.5% B&O tax without the surcharge.
When it was enacted in 2010, the 20-percent surcharge on the services B&O tax rateâ€”moving the rate from 1.5% to 1.8% of a firmâ€™s gross revenuesâ€”was carried out with repeated promises by key legislators the controversial tax package would be temporary and would not become permanent.
Even without passing a billion dollar package of new and increased business taxes, state spending in 2013-2015 biennium will grow 6.6 percent ($2.0 billion) above the levels of spending in the current biennium.
As the Association of Washington Business says:Â The Senate-passed bipartisan budget â€œputs $1.5 billion into our stateâ€™s public schools WITHOUT raising taxes or introducing new ones.Â And when it passed out of the Senate chamber, it had broad bipartisan support, as reflected by the 30-18 vote count.â€
We urge you to call or write your legislators today to oppose making the B&O tax surcharge on businesses permanent. Take a moment today to contact your state senator and representatives to tell them how making the temporary B&O tax surcharge permanent will hurt your business.Â You can write, call, email, or use the toll-free legislative hotline at 1-800-562-6000.