House finance committee approves removal of beer tax

The House Finance Committee voted 8-5 along party lines Tuesday to approve a $900 million tax package that, while making permanent some business taxes, did not extend a temporary tax on beer as Democrats had first proposed.

Republicans offered a series of unsuccessful amendments seeking to omit elements of the package — everything from closure of a tax break for out-of-state shoppers to a tax on certain imports and bottled water.

A final striking amendment from Rep. Reuven Carlyle, the Seattle Democrat who chairs the finance committee, dropped insurance agents, janitorial and stevedoring services from the list of repealed tax exemptions, but kept most of what originally was a $1.16 billion plan.

“We took out some of those that presented various difficulties,” Carlyle said after the vote. “… Any time you are trying to close tax exemptions it’s hard, hard, tough work.”

Carlyle acknowledged concerns that the beer tax could sink the whole package if it went to voters — which happened a few years ago with soda pop when the American Beverage Association filed an initiative to repeal taxes on pop and candy.

“I think it’s fair to say the beer industry — the big industry players, (such as) Anheuser Busch — do not look at $5 or $10 million for an initiative repeal as a deterrent or much of a problem. … That’s a risk,” Carlyle said. “(W)e were not willing to take the risk of that happening.”

The bill still levies lots of taxes that are not in effect today — or would not still be in effect after June. It eliminates tax breaks for bottled water, travel agents, and high-tech research and development. It also gets rid of a utilities tax break for interstate truckers that Washington is one of the few states to offer, according to Carlyle.

Republican Rep. Ed Orcutt of Kalama, and others on the committee, said the state has plenty of money for education and did not need to end the tax breaks at stake. He described the closure of tax breaks as tax increases and warned, “We still have a struggling economy.”

Orcutt also said the state has 58,000 fewer people employed than before the recession, and he argued that growth in jobs could provide more revenues. “It’s the courage to fund education first and say no to some other people,” Orcutt said.

Carlyle and other Democrats on the finance panel said the state needs more funds to pay for education, which is the result of the state Supreme Court’s ruling a year ago in the McCleary case. They also said they hope a broader conversation can follow on how to change the Washington tax code that is so reliant on taxes that hit a business’ gross receipts.

Some of the GOP amendments offered Tuesday could return when the bill goes to the floor — as soon as Thursday. The bill faces a steep climb in the tax-averse Senate.