When the state’s Democrat-controlled Legislature took final action to nix the sales tax exemption for Oregonians shopping in Washington, the bulk of lawmakers didn’t see this move — expected to generate $26 million a year in additional revenue — as particularly controversial.
And why would they? Most shoppers in the Puget Sound region, the most populous in Washington, are state residents.
But it’s far different perspective for lawmakers representing areas on the border, such as Walla Walla County, where Oregonians do a sizable amount of shopping. Anecdotally, it appears that perhaps 20 percent of the shoppers are from Oregon at specific businesses in the Walla Walla Valley.
So if those shoppers have to pay the 8.9 percent sales tax (6.5 percent state and 2.4 percent local) they might well opt to shop on their side of the border.
That stinks for merchants in our Valley.
This is why we urged lawmakers the past two years not to adopt this shortsighted proposal. The tax dollars gained for the state — estimated at about $53 million for the two-year budget cycle — could ultimately hurt the economy if retail sales and jobs vanish in Walla Walla and College Place.
It would also have a big negative impact on the Vancouver area, which is just across the Columbia River from Portland.
It’s estimated that Oregon shoppers in Vancouver’s Clark County will contribute about 20 percent of the estimated additional tax revenue while they will add about 8 percent by spending in Walla Walla, Franklin, Columbia, Garfield and Asotin counties.
Again, not much gain for what could be a lot of pain.
“The reality with consumers is you only have to give them one little reason not to visit your business,” said Brain Gaines, owner of Wall 2 Wall Furniture on Main Street. “It’s the most ignorant thing ever.”
Gaines’ point is well made.
Some — perhaps many — Oregonians will opt to reduce or stop shopping in Washington out of principle.
The bottom line is that repealing this tax exemption at the point of purchase might hurt the state’s economy worse than anticipated.
However, Oregonians can still get the state portion of the tax — 6.5 percent — back if they save their receipts and file for a refund with the state.
This could help reduce the hit on merchants. The stores would be wise to remind Oregonians of this option and do what they can to help them navigate the process.
In the end, this effort to claim just under $53 million more revenue for the state in a budget close to $53 billion is a loser for the entire Valley, on both sides of the border.