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Issue Date: Vol. 50, No. 5, May 2010, Posted On: 4/16/2010

Washington State Levies Taxes On Candy, Soft Drinks And Bottled Water

Tim Sanford
vending, vending machine, vending machine business, vending industry, vending operator, candy tax, soda tax, water tax, Washington state excise tax on soft drinks, Brad Boswell, Northwest Automatic Vending Association, HB 2561, Christine Gregoire, Lynn Kessler, Lisa Brown

OLYMPIA, WA -- Washington has enacted or increased a number of taxes that concern vending operators as part of a measure designed to address the state's revenue shortfall. These include a boost in the business and occupation tax service rate from 1.5% to1.8%; the application of sales tax to candy and, provisionally, to bottled water and an excise tax on soft drinks of 2¢ per 12 fl.oz.

According to a Northwest Automatic Vending Association member bulletin authored by Washington legislative consultant Brad Boswell, "This proposal was pushed by the governor [Christine Gregoire] in a last-minute deal between her, the Speaker of the House [Rep. Lynn Kessler] and the Senate Majority Leader [Lisa Brown].  There was no hearing and no public process other than the final vote in the House and Senate."

The B&O rate increase, projected to raise approximately $241.9 million, takes effect on May 1, 2010, and is supposed to "sunset" on April 30, 2012. The sales tax on candy is expected to raise around $30.5 million, and the new soft drink tax is anticipated to bring in some $33.5 million; it will be implemented starting on June 1, 2010. The soda tax is slated to "sunset" on June 30, 2013.

Levying the sales tax on bottled water is contingent on Washington receiving an exemption from the Streamlined Sales Tax Governing Board, Boswell explained; and it was due to "sunset" on June 30, 2013. However, he added, the legislature attached the revenue stream from this tax to HB 2561, under which the state would issue bonds to pay for energy-efficiency improvements at public schools and colleges, thereby creating jobs. If this measure passes, the levying of sales tax on bottled water would become permanent.

"The entire industry worked feverishly during the final three days to stop this package, and included major advertising and grassroots phone calls and e-mails to stop these taxes," the NAVA legislative consultant said. "Unfortunately, the pressure from the governor and liberal constituencies drove these taxes through.  Currently, the affected industries are assessing the impacts and identifying options at all levels.

"The bill that included these taxes also included a three-year sunset of them," Boswell added. "However, there is no confidence in current Democratic majorities that any of these taxes will actually sunset in three years."

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