There may be support for proposed online sales tax, but could Washington actually collect any revenues?
The 2017–19 operating budget that was passed by the House earlier this year assumes enactment of several new taxes. These include requiring remote sellers, marketplace facilitators and referrers to collect and remit sales taxes on online purchases made by Washington residents or report the sales to the Department of Revenue (so that it could then collect use taxes from the buyers directly). It’s estimated that it would increase revenues by $329.2 million in 2017–19.
The News Tribune reports on eBay’s lobby efforts against the proposal, noting,
There are signs the tax might have enough support to pass.
The Republican-led coalition in control of the state Senate has resisted the idea less than other taxes proposed by the majority Democrat House, signaling the tax might be on the table in a final budget compromise.
Regardless of whether there is bipartisan support for the proposal or whether it is good or bad tax policy, it is not currently constitutional. The U.S. Constitution limits the ability of states to tax out-of-state businesses. There has been a lot of legal movement on this issue in recent years, and there’s ongoing litigation in other states. (We wrote about the issue in a policy brief in March.) So it’s possible this could be a source of revenue in the future. But legislators may not want to count on it to balance the budget for the upcoming biennium.