The Association of Washington Business, the conservative statewide business lobby group, will push hard this year for legislation that would consolidate collections of cities' business and occupation (B&O) taxes at the state level---legislation the city finance office has estimated could cost Seattle as much as $43 million a year.

Some background: Last year, Gov. Chris Gregoire proposed"streamlining" the collection of B&O taxes by having the state, instead of individual cities, collect the taxes---the idea being that the change would make it "cheaper and easier," in Gregoire's words, to collect the taxes. However, Seattle officials protested that the change would make the overall tax collection process more complicated (because businesses in every city would have to adopt a new, top-down structure for determining how much they owe in taxes) and cost cities money (because it would allow companies to determine how much of their income is technically earned inside, vs. outside, the cities in which they operate.)

The proposal, Seattle argued, would also allow for much greater levels of tax evasion, and would eliminate several business taxes that cities currently collect.

State Rep. Ross Hunter (D-48), head of the house budget committee, says he's "open to working with" the AWB on the B&O tax issue, but adds that he thinks cities like Seattle "should be able to collect a portion of the B&O tax" on business that takes place in those cities. Currently, businesses in five Washington State cities, including Seattle, pay 90 percent of local business and occupation taxes in the state.

The AWB's Amber Carter confirmed that the group does intend to make the B&O legislation a priority in the upcoming session, but did not return a followup call seeking further details about why the group supports the bill.
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