Bill Virgin: Maybe you need take another look at your receipts — and the sales tax paid

Staff writerMarch 23, 2014 

Here’s some interesting reading, if you care how much you pay for stuff or what happens to your hard-earned dollars once they leave your wallet — the Department of Revenue’s quarterly update on tax changes.

If you happen to be journeying to the faux-Bavarian town of Leavenworth, for example, expect to pay an additional tenth of 1 percent sales and use tax come April 1, bringing the rate to 8.4 percent. The stated purpose of the increase is to fund criminal-justice and safety services.

Closer to home, the sales tax in Roy is also going up a tenth of 1 percent, to fund public safety, although there the total hit will be 8 percent.

And if for some reason you choose to spend the night at a hotel in Thurston County, expect to cough up an extra $2 per room per night, because of the creation of a tourism promotion area.

Most of these increases and the underlying sales tax burden tend to get lost in the day-to-day shuffle of transactions. To the extent that they’re noticed at all, sales-tax rates in Washington typically prompt a bit of grumbling, or perhaps a shrug of recognition (at least around April 15) that, “Oh well, at least we don’t pay a state income tax.”

But every so often Washington’s sales-tax levels draw more notice and pointed comment, such as when state residents venture beyond the borders to somewhere such as Oregon (no sales tax, but they do have one of those income-tax things) — or when someone helpfully points out the differences from state to state.

Which is what the Tax Foundation did recently with an updated report on sales tax rates across the country. Forty-five states collect statewide sales taxes; thirty-eight collect local sales taxes.

Of the 45 states, those with the highest average sales taxes (including local add-ons) were Tennessee (9.45 percent), Arkansas (9.19 percent), Louisiana (8.89 percent) – and Washington, at 8.88 percent.

At first blush, that sounds low. The Tax Foundation says it mashed together census population data by ZIP code with the sales tax charge to come up with a weighted average. Since high-population locales such as Tacoma, Bellevue and Seattle also tend to hit the ceiling of state and local rates – 9.5 percent – that ought to pull the rate higher.

But a scan of the Department of Revenue’s table of local rates reveals that, even in the Puget Sound region, there’s a lot of territory with lower sales taxes. Just in Pierce County, Gig Harbor is at 8.5 percent, and Buckley and Eatonville are at 7.9 percent. In King County, towns such as Enumclaw and Covington are at 8.6 percent, as are those parts of Renton, Kent and Auburn that are outside the regional transit district.

The source of such variability in sales tax rates is the local options (although not optional for you the consumer, unless you go somewhere else) and add-ons. There are a bunch of them, as detailed in a DOR report on the history of tax law in Washington.

The state takes the first 6.5 percentage points of the sales tax The maximum sales tax rate in the state is 9.5 percent (9.8 percent for motor vehicles, DOR says).

Where’s the other 3 percent going? The DOR history says there are 25 different types of local sales tax; 10 of those act as credits against the sales tax, so they don’t increase the overall bite to consumers.

Cities and counties are allowed a base rate of half a percentage point and an option of another half a point. Beyond that there are provisions for public transit districts, high-capacity transit, criminal justice, public facilities, a baseball stadium, a football stadium, food and beverages, juvenile correctional facilities, rural counties, a zoo and aquarium in Pierce County, regional centers of public facility districts, emergency communications, regional transportation, public safety, passenger ferries, transportation benefit districts, mental health and chemical dependency, hospital benefit zone, local infrastructure financing, municipal services for an annexation area, regional theaters of public facility districts, health sciences and services, local revitalization financing — and we haven’t even gotten to the list of environmental taxes such as fees on new wood stoves or replacement tires.

This isn’t just a lot of dry history — what state and local government collects and why figure into a lot of contemporary and ongoing debates.

One is the battle over collecting taxes for sales made online vs. in a physical bricks-and-mortar location. Retailers already unhappy about the drain of shopping dollars in border areas are even madder about the no-tax convenience that online shopping and product delivery at home affords.

Then there’s the scramble for government revenue from a phone-book sized list of competing entities, every one of which arguing that its little sliver will hardly be noticed in the overall bill. But all those slivers add up, and eventually consumers wake up to the piece of lumber they’re being hit with.

It will be fascinating to see who is hungry enough for more money to propose breaching the round-number threshold of 10 percent. It’s actually happening for tourists in Cle Elum, where a special lodging tax added to one already in place will, according to DOR, push the total rate to 10 percent.

Finally there’s the occasionally recurring call for an income tax in the state. Taxpayers will look at the list of add-ons and local options in the sales tax, notice the same thing going on with their property-tax bill, figure an income tax will experience the same phenomenon and continue to swat away any proposals to add one.

That’s a lot of weight to be carried by a tax that, as a line-item on a receipt, many consumers barely glance at. But even the hurried and harried taxpayer may stare at the amount long enough to be moved to asking questions and casting votes — or to contemplate making the next shopping excursion a short trip down Interstate 5, or an even shorter journey of a few steps to the home computer.

Bill Virgin is editor and publisher of Washington Manufacturing Alert and Pacific Northwest Rail News. He can be reached at bill.virgin@yahoo.com.

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