Reduced spirits tax will bring relief
More than two years ago, in November 2011, Washington voters went to the polls and approved the privatization of spirits sales in the state, on the presumption of lower taxes and relief from drastically high prices.
Today, it is clear voters have gotten anything but what they voted for. Now, consumers and businesses are faced with taxes and fees on spirits that are more than five times the national average. It's time we did something to alleviate this burden.
That's why I have introduced legislation in the Senate that would reduce the tax on all spirits sales in Washington from a shocking 20.5 percent to the state tax rate of 6.5 percent. Bringing the tax rate in line with what we pay for other goods in Washington. This will bring much-needed relief to consumers and businesses alike, and pump additional money into our state's economy.
Since these unnecessary taxes and fees went into effect, Washington consumers have been forced out of the state in search of lower prices.
Recent news articles have estimated that Idaho state liquor stores have made as much as $10 million from our state's residents buying there instead of here. And in one Oregon store, sales surged as much as 89 percent in one month alone, with customers lined up out the door.
This has had a detrimental effect on our small businesses, many of whom have been forced to close their doors permanently.
Meanwhile, the state has generated more than $500 million in taxes and fees from distilled spirits. That's $200 million more than the state was making before privatizing spirits sales and nearly 40 percent more than what voters were told they were supporting. All this surplus comes on the backs of consumers and community businesses.
Privatization has benefitted businesses and consumers throughout the state, but the unintended consequences of this policy have resulted in exorbitant taxes and fees. Hard-working Washingtonians deserve a solution to this problem, one that will be good for consumers and businesses, but also allow us to continue to enjoy the same level of services on which we have come to rely.
My bill would do just that.
Reducing the tax we pay on distilled spirits in Washington will mean consumers will no longer have to cross state lines to find reasonable prices, keeping money here in the state and allowing businesses to flourish.
Senate Bill 6547 is also expected to help Washington businesses generate $80 million in new business sales annually, once the tax rate reaches 6.5 percent. This will mean our businesses will be able to compete and create jobs here in the state.
In addition, by phasing in the spirits sales tax reduction gradually, over a period of eight years, we will significantly lower the tax burden on consumers while generating the revenue that Washington needs. This solution will generate at least the same amount of revenue for the state as it received before the implementation of privatization, ensuring the government can continue to deliver for taxpayers.
It's clear that spirits taxes in Washington have spun out of control. Our residents and small businesses need a fair tax structure that enables them to pay prices that are comparable with what consumers pay in states across the country. As our economy continues to recover, we should do whatever we can to keep jobs in our state, and money in our taxpayers' wallets.
I thank Senators Hobbs and Liias for joining me on this vital legislative effort. I hope the rest of my colleagues will soon follow suit. Washington consumers deserve better.
Senator Janéa Holmquist Newbry, R-Moses Lake, is the chair of the Washington Senate Commerce and Labor Committee, which conducted a work session on Senate Bill 6547 on Feb. 26.