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Home » Archives » March 2011 » Repealing BC-Resident Sales Tax Exemption

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03/09/2011: "Repealing BC-Resident Sales Tax Exemption"

OLYMPIA - Since Washington’s revenue primarily comes from the sales tax, it means residents of the state are picking up the tab for out-of-town visitors who hail from states or our Northern neighbors that don’t charge sales tax.

Senator Kevin Ranker, (D-San Juan Island), sponsored Senate Bill 5763. The bill will now land on the Governor’s desk for approval. Legislators representing border communities joined Ranker in support of the bill.

The state House and Senate have each passed their versions of a bill (SB 5763 & HB 1936) that would disqualify Canadian residents from the nonresident exemption.

Last summer British Columbia changed its sales tax to effectively combine Canada’s federal goods and services tax and B.C.’s regional provincial sales tax into a single value-added tax on purchases.

The change made Canadian shoppers of certain states and provinces without sales tax eligible for a sales-tax exemption.

As much as 10 percent of the sales tax collected in Bellingham is from Canadian residents. Significant amounts of revenue would be lost as a result.

Bellingham and Whatcom County sued the state Department of Revenue, and a Skagit County judge issued a restraining order on the exemption.

Said Ranker, “Lawmakers will be faced with many tough choices this session " but this isn’t one of them. At a time when state and local governments are doing more with less than ever before, this choice is an easy one. This bill ensures fairness for Whatcom County residents and ensures that visitors contribute to the infrastructure and fabric of the communities that they frequent. For Whatcom County, passage could spell hundreds of thousands in foregone revenue invested back into the community and back into critical public services.”

“I’m grateful for the support of both cities and counties in passing this critical legislation. This is a big victory for Whatcom County,” Said Ranker.

Here are statements on the bill’s passage by Reps. Jeff Morris (D - Mount Vernon) and Kristine Lytton (D - Anacortes):

Rep. Jeff Morris: This is the way Washington has done business for many years. When nonresidents visit our state and are able to avoid paying our sales tax, it means they’re using our services but not paying for them. When we cross into BC, we must pay their tax upwards of 12 percent on every purchase. Even with this disqualification, Canadian visitors are receiving a deal by shopping in our state.

Rep. Kristine Lytton: This is critical funding for both our state and our local governments that see thousands of Canadian shoppers cross the border and spend the day in Northwest Washington. We love to host them, but we cannot afford to pay for the local infrastructure and capacity needs on our own.

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