1. Isn't it weird that ... state Rep. Ross Hunter (D-48, Medina), who says he needs to find new revenue as the Democrats' budget point person, is sponsoring a bill that would actaully cost the state $5.2 million this biennium—and more than $16 million over the next three biennia, according to the fiscal note.
Rep. Hunter's legislation would change the voter-approved liquor privatization initiative by letting Costco off the hook for paying the 17 percent licensing fee on sales to restaurants and bars.
Costco is trying to get in on the restaurant and bar market; they're simultaneously suing in Thurston County Court to get rid of another provision in the law that puts a 24 liter limit per day on retail sales to restaurants and bars. They're arguing that the limit only applies to individual transactions, meaning a bar owner could make any number of 24-liter purchases in a single day. The Washington State Liquor Control Board has interpreted the law to mean there's a 24-liter limit per day.
A competing piece of legislation would actually add $20 million to state revenues, propoents say.
A competing piece of legislation, sponsored by Rep. Steve Theringer (D-24, Sequim), would actually add $20 million to state revenues, proponents say (there's no fiscal note yet), by locking a 10 percent distributors' fee in place (instead of lowering it to five percent as the initiative requires).
Distributors are actually the ones pushing this bill because they don't like the Costco bill; they're scared Costco will move into the booze distribution business for restaurants (where two big distributors, Youngs and Southern, currently dominate), so they're offering up this alternative—which would also halve the $2.44 restaurant and bar tax, but still be a net gain for the state thanks to the ongoing 10 percent distributor fee.
Both Costco and the distributors point to language in the initiative to make opposing cases about the 17 percent license fee. Costco notes language in the intiative that says: "a sale by a spirits retailer is a retail sale only if not for resale"—meaning sales to restaurants (i.e., for resale), shouldn't be taxed. However, the distributors point to language in the initiative that says "each spirits retail licensee must pay to the board ... a license issuance fee equivalent to seventeen percent of all spirits sales revenues under the license, exclusive of taxes collected by the licensee and of sales of items on which a license fee payable under this section has otherwise been incurred"—meaning the license fee is separate from the retails sales tax. (It says "all spirit sales," the distributors stress, without any qualifiers about "retail" sales that Costco points to.) It's also worth noting that Costco isn't challenging this provision in court (like it's challenging the 24-liter provision), but is instead, trying to amend how the 17 percent provision is written.
Costco co-founder Jeffrey Brotman, Hunter's neighbor in Medina, contributed $625 to Hunter last election.
Neither the Association of Washington Sprits & Wine Distributors, nor their two big members, Young's and Southern, appear on Theringer's campaign finance reports.
By the way, opponents of the Costco bill at distributors association say the fiscal note on Hunter's bill—the $16 million in losses over the three biennia—is low because it's only based on the volume of current sales between retailers and bars and restaurants, rather than on Costco's potential liquor revenues if they took advantage of the loophole and expanded those booze sales.
We have a message in to Rep. Hunter and to the Washington Restaurant Association which supports the Costco bill.
2. Isn’t it weird that … Amber Carter, the spokeswoman for the Assoication of Washington Business, compared the business community to David, as opposed to Goliath, when it comes to state business and occupation taxes?
The AWB, the state’s biggest business lobbying group, is opposing a proposal by the the state's largest cities that would allow cities like Seattle to collect B&O taxes through a centralized database maintained by cities, rather than a much larger database proposed by former governor Chris Gregoire maintained by the state.
The state database would give businesses a number of tax exemptions and eliminate several business taxes that cities currently collect, costing Seattle as much as $43 million a year, according to the city.
It’s hard to see how the AWB, which would benefit from $43 million in a tax windfall from Seattle alone—not to mention what businesses would save in taxes in other large cities, like Bellingham and Tacoma—can portray itself as the underdog in a David-vs-Goliath battle.