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
Last week, the House Democratic Caucus announced its plan to raise a variety of business taxes by $1.3 billion next biennium.  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.   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.  The announcement follows Governor Inslee’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 forever—that’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 rate—moving the rate from 1.5% to 1.8% of a firm’s gross revenues—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:  The Senate-passed bipartisan budget “puts $1.5 billion into our state’s public schools WITHOUT raising taxes or introducing new ones.  And when it passed out of the Senate chamber, it had broad bipartisan support, as reflected by the 30-18 vote count.”


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.  You can write, call, email, or use the toll-free legislative hotline at 1-800-562-6000.

HB 2038




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