The Washington House has approved a $680 million tax package that would shrink tax exemptions, collect more money from smokers and service businesses, and extend the sales tax to new types of purchases.
The 52-45 vote, which came in the pre-dawn hours Tuesday after about five hours of debate, finally sends ruling Democrats from the House and Senate into negotiations over how to solve a $2.8 billion deficit in the state budget through June 2011.
Significant differences remain between the two chambers’ tax and spending plans with only three days left in the Legislature’s regular 60-day session. If legislators are unable to reach a deal in time, Gov. Christine Gregoire could be asked to call a special session.
The House tax package is significantly smaller than the $890 million tax blueprint approved by the Senate last weekend. It also avoids a general sales tax increase – a step endorsed by the Senate, but disliked by Gregoire.
The heart of the House tax plan is a $380 million mix of revisions to the tax code, which majority Democrats characterize as the closing of unfair “loopholes.” That includes $155 million from reversing a court ruling that extended tax breaks to out-of-state direct sales companies, and another $73 million from changing the way out-of-state businesses are taxed – aimed mostly at credit-card issuers, banks and other financial firms.
House Democrats also want to significantly expand the sales tax base, applying the state’s 6.5 percent sales tax to custom software, candy and gum, bottled water and elective cosmetic surgery. That would be worth about $144 million through June 2011.
The House also wants to add another $1-per-pack tax to a pack of cigarettes, reaping about $112 million, and raise business taxes on service providers such as lawyers, accountants and consultants. (AP)
