A colleague of mine was recently told by his teen’s drivers-education school to expect a larger bill this fall because of the “crazy tax hikes signed by the governor.” In this case it’s the new law that will force even more businesses in our state to collect sales tax, starting Oct. 1.
The person who delivered the bad news was apologetic; however, this is the fault of the state’s majority Democrats. A teen-driving course that now costs $650 will soon be closer to $715 once you add the new sales tax — passed primarily to cover the multibillion-dollar pay raises for state workers approved by the previous governor.
Even though it’s estimated to cost nearly $4 billion over four years, the sales-tax hike isn’t the largest of the tax increases that will hit when October arrives. That title belongs to the jump in the business-and-occupation tax rate, which is expected to take another $5.6 billion from Washington employers over four years.
The start of October also will bring a smorgasbord of smaller tax increases, including one that will affect rented storage units, and a 50% increase in the cost of the Discover Pass needed to access state parks and other recreational lands.
However, out of all the new taxes in the record-breaking $12.2 billion package passed by the majority Democrats this year, the sales-tax increase is clearly causing the largest amount of chaos.
In a matter of weeks, up to 95,000 businesses across Washington must begin collecting sales tax on services that have never been taxed. That’s more businesses than there are people in Centralia, Chehalis, Longview and Camas combined.
Unfortunately, it’s still not clear what is and is not taxable under the new law, and businesses will be lucky if they get meaningful guidance from the state Department of Revenue before mid-September.
That means maybe two weeks to figure out how to collect and send the taxes to Olympia, knowing they can be held liable for getting it wrong. It’s no wonder the level of frustration and apprehension in the business community is high.
This situation arose late in our 105-day session, as Democrats continued hunting for ways to get more money into government’s hands. They began rushing the sales-tax increase through with only 11 days to go and set the tax collection to begin just five months out.
The short timeline forced the state’s revenue office to skip the established process for interpreting the new law. It had to find a hastier way to judge what does and does not fall into broad categories like advertising services, information-technology services, security services, and temporary staffing services, all of which are among the activities now considered taxable retail sales.
The advertising-services category is thought to include advertising services on cable and streaming platforms, meaning anyone who subscribes to those should expect higher bills as the costs are passed down.
However, there are still many questions — like whether referees or others hired for school events will be considered temporary staff, and therefore taxable.
Then there’s the category of “live presentations,” which the law views as including but not being limited to lectures, seminars, workshops, or courses where participants attend either in person or “via the internet or telecommunications equipment that allows audience members and the presenter or instructor to give, receive, and discuss information with each other in real time.”
That definition seems wide open, which is why businesses have asked whether it’s fair to treat educational courses — driver’s education, for example — the same as presentations that are purely for entertainment, like a concert or comedy show.
Employers also wonder where the line is when it comes to presentations like school concerts, online religious services, prep for trade licenses, or preschool storytelling.
As frustrating as this may be for the state’s tax collectors, the taxpayer community has more reason to be outraged because of the potential consequences.
For instance, what might happen if a business fails to comply with a fuzzy part of the law despite acting in good faith? History shows there are rarely consequences when the state is in error, but taxpayers who make an honest mistake still get fined.
The revenue department has already signaled it will ask for changes in the law when legislators meet in 2026, but that won’t help anyone in the meantime.
This costly, chaotic situation was completely avoidable. The Senate Republicans’ $ave Washington budget was balanced without a single tax increase or a single cut to essential services.
Instead, we have another example of how wrongheaded Democrat policies and priorities are making life in our state even less affordable, with seniors and lower-income families feeling the pain most of all. Legislators must do better.
COMMENTARY DISCLAIMER: The views and comments expressed are those of the writer and not necessarily those of the Lynnwood Times nor any of its affiliate
Author: Lynnwood Times Contributor
2 Responses
More taxes are coming for two primary reasons: Expansion of government along with raises, benefits, and pensions and increased costs for social services. You can just imagine what the term “social services” encompasses.
great day