Tax incentives are important to retailers along Washington’s borders

Sep 4, 2019
Written by Renée Sunde, President & CEO

Concerns are rising for retailers along our state’s borders with Oregon as they react to a new tax-related law that took effect on July 1.

A Camas nursery owner said he closed his business because of it. A Woodland tractor business owner says he’s planning to move because of it. Other small businesses just north of Oregon are reporting significant drops in their sales.

The new law approved by the Legislature earlier this year removed an immediate sales tax exemption for Oregon residents, who have no sales tax, if they bought items in Washington State. Many border businesses in Washington have been a big attraction for Oregonians, many of whom work in southern regions of Washington State, as a result.

But now, those same Oregonians must save their receipts and apply for tax refunds after the first of next year. The problem is that many aren’t bothering and have found new retailers to patronize back home. Tim Doyle, owner of a Woodland, Washington tractor business, told The Columbian newspaper that his business has dropped nearly 60% since the new law took effect.

To a lesser degree, Montanans who also don’t pay sales tax used to help Spokane-area businesses when the sales tax exemption was in place. Such incentives often encourage additional spending by shoppers in restaurants, gas stations and other service-oriented retailers.

The lawmakers who supported this legislation apparently believed state revenues would rise by removing the tax breaks. But John Mackay, owner of the Camas nursery, told the newspaper that he closed his business rather than suffer through a slow loss of business that might have resulted in the same outcome anyway.

It’s too early to know the full impacts but the Legislature should consider doing a study of the economic impacts of the law as more time passes. The results may justify reinstituting the tax incentive to help bring out-of-state shoppers back to Washington.

Meanwhile, fall is quickly approaching and it’s back-to-school shopping season. Students, parents and teachers are stretching their budgets to purchase supplies that many school districts are struggling to afford. Washington Retail has supported a much-needed back-to-school tax holiday that would help families stretch their budgets, but to no avail.

As we move toward the next Legislative session, these are a few of the tax-related issues we’re watching to determine how our state’s policies are impacting retailers, their employees and their customers.

You can read more stories from Washington retailers’ concerned about the conversion of the sales tax exemption into a remittance program in The Vancouver Columbian, The Bend Bulletin and The Longview Daily News.