PENINSULA — Oregon residents who shop while in Washington will likely start seeing sales tax added to their bill in July.

Late last month Washington legislators passed Senate Bill 5997, which ends the practice of retailers taking sales tax off of Oregonians’ purchases after they show ID. Instead, out-of-state residents who paid more than $25 in state sales taxes in a year would have to fill out tax forms once a year asking for reimbursement.

The bill is now on Washington Gov. Jay Inslee’s desk, where he can choose to sign it, veto it or take no action. It would take effect July 1, and proponents of the bill estimate it would raise about $53 million per two-year budget cycle from visitors who won’t bother to submit the forms or won’t reach the $25 minimum.

Local impacts

The change is mostly likely to affect residents living on the state line. However, in the case of Pacific County and Clatsop County, it’s unclear what impact there will be on retail commerce. In some cases the products purchased by out-of-state tourists are exempt from sales tax, while some merchants think the tax — a little over 8 percent — isn’t likely to influence many purchasing decisions made by tourists visiting the beach communities.

“Because most of our items are food-related and therefore exempt from the tax, we don’t have much to do with the sales tax form for our Oregon customers,” Ralph Moore, owner of The Candy Man in downtown Long Beach, said.

“A quick survey with the local merchants is that they do a brisk business with the Oregon people and the sales tax exemption but they are not sure it would hurt their business once it is done away with,” Moore said. “I understand it just causes them more paperwork for the state. My opinion is that the tourist industry won’t be affected much, but any business that does big-ticket items that might draw business to the Washington side might be.”

The strongest expression of concern came from Dennis Company Ace, which sells a broad array of products of interest to regional residents and tourists alike.

“As a company, we would not support the move to eliminate the retail sales tax exemption for Oregon residents. Our Long Beach store is 30 minutes from the Oregon border. Eliminating the exemption would deter Oregon shoppers from crossing over to shop at our store due to the addition of sales tax. Why would they want to cross the bridge into Washington if they can purchase the goods for less in Oregon,” Colleen Nissell, Dennis Company Ace associate district manager, said.

Long Beach City Administrator David Glasson said the change probably won’t make much difference for town finances. “I don’t think it would add up to 1 percent of our current collections,” he said. “Based on last year, that would either add up to $6,000 in tax collections, or if people choose not to buy because of it, $6,000 less.”

‘We’ll take their money’

Farther east on the border between the states, Kacie Evans, Umatilla Chamber of Commerce director, said she thinks Washington’s loss will be Oregon’s gain as more Oregonians choose to shop local.

“I think a lot of people are going to stay home,” she said.

Evans said cities on the Washington border already benefit from a daily flow of Washington residents choosing to make big purchases in Oregon to avoid sales tax.

“We don’t discriminate; we’ll take their money,” she said.

Locally on the Long Beach Peninsula, the scenario Evans outlined is exactly the concern for merchants like Dennis Company Ace.

“The Long Beach area is a tourist destination, and we want to continue to attract visitors to the area. Removing the exemption may keep some of those travelers at Oregon beaches instead of choosing to vacation in Washington,” Nissell said. “This would not only impact our company in the loss of retail sales, but would also impact other businesses on the Peninsula due to a possible reduction in visitors.”

Reimbursement rules

If Inslee signs Senate Bill 5997, Oregon residents who wish to be reimbursed for sales tax will be required to submit proof of nonresidency and information required by the revenue department, which may include, “a description of the item purchased for which a remittance is requested, the sales price of the item, the amount of sales tax paid on the item, the date of the purchase, the name of the seller and the physical address where the sale took place, and copies of sales receipts showing the qualified purchases.”

According to a legislative staff summary of the bill, public testimony on behalf of the bill has stated that it is “thoughtful tax policy” that helps bring in adequate revenue for state services and pay for roads and other services visitors use.

Opponents of the bill testified that it would hurt retailers living near the Oregon border and be “devastating” to Washington’s travel industry.

“Buyers who are entitled to the exemption will be understandably unhappy with the bookkeeping requirements that appear to be designed to make the process difficult,” Tom Downer, of Jack’s Country Store, said. “We’re working on a handout to help our cashiers defuse the situation by providing information for complying with the new requirements.”

In Long Beach, Moore commented that the state’s manipulations of taxation are consistently tone deaf to the concerns of small business.

“Every government, state and local, is looking for money, never really concerned about how businesses are affected,” he said. “Fortunately, good business people seem to be smarter then the government and continue to find ways to survive.”

—The Chinook Observer contributed to this story.

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