On Wednesday, April 9, a coalition of 123 businesses, chambers of commerce and other industry groups signed on a letter to Washington state politicians stating that the proposed business and occupation (B&O) tax to aid in correcting the state’s budget shortfall will directly impact the everyday consumer.
The coalition consists of small, medium and large Washington businesses. They are calling on Gov. Bob Ferguson and leaders in the Washington state House and Senate to reconsider both the number and scale of proposed tax increases this session, warning of negative impacts on jobs, business retention and consumer costs.
House Bill 2045 would add a 1% B&O tax surcharge on businesses with taxable income over $250 million. The B&O tax surcharge would also increase from 1.2% to 1.9% on financial institutions. But, the coalition states that family-owned and other local, smaller businesses on already narrow margins will be affected.
The coalition is concerned that the surcharge tax will further compound the skyrocketing costs for almost all essential consumer goods, including food, shelter and housing, with tariffs being an additional factor.
The response, coordinated by the Washington Food Industry Association, Washington Retail Association and the Northwest Grocery Retail Association, comes on the heels of the governor’s April 1 press conference about the state operating budget.
The Greater Vancouver Chamber was one of the 123 entities that signed the letter. They are concerned that the surcharge targeting 370 of the highest grossing businesses in Washington state will end up directly impacting local businesses and families struggling to get by in the financial climate.
“The letter we co-signed with nearly 120 organizations across the state clearly outlines the ripple effects of what’s being framed as a tax on ‘large corporations’ and financial institutions,” John McDonagh, president & CEO of the Greater Vancouver Chamber, stated. “While those entities may be obligated to pay the tax, history has shown that the cost is often passed down to consumers through higher prices. We are already seeing instability in investment markets, rising costs in anticipation of tariffs, and widespread uncertainty at every level of our economy. Adding another financial burden — no matter how targeted it may appear — ultimately impacts the entire business community and the consumers of our state.”
McDonagh added that the Greater Vancouver Chamber stands with Gov. Ferguson in the belief that the state cannot tax their way out of a spending problem.
“Like the governor, we believe it’s time to move budget discussions in a new direction that avoids compounding economic uncertainty,” the letter from the coalition states. “We also urge you to consider the growing chorus of concern from local elected officials who are sounding the alarm about the destabilizing effects these tax increases could have on job markets, business retention, and overall economic health. Just as importantly, they recognize the direct impact these proposals would have on their constituents — working families already facing high costs for basic needs such as food, housing, fuel and health care.”
Many businesses in the state are already operating on margins as low as 1%, the letter states. “They simply cannot absorb additional costs without adjusting prices,” the letter adds. “And when businesses are forced to raise prices, it’s consumers who ultimately pay. Washington families are already grappling with persistent inflation, higher housing costs and rising utility and fuel expenses.”
Washington Food Industry Association President & CEO Tammie Hetrick said independent grocers, neighborhood markets and convenience stores are already struggling to stay competitive with existing inflation concerns and new tariffs, according to a news release about the letter to politicians.
“Our member stores cannot continue to absorb additional costs, and unfortunately, that means consumers will pay more,” Hetrick said in the news release. “Independent grocers are trying to keep costs down but given all the other increases — including utilities, insurance and employee costs — those increases are ultimately reflected in higher prices for consumers. We need a more sustainable approach to addressing the state budget.”
Amanda Dalton, president and CEO of the Northwest Grocery Retail Association, representing Washington’s grocery retailers and vendor and supplier partners, expressed similar concerns about cost impacts in the release.
“Gross receipts taxes, like the ones before the Washington Legislature, are devastating to high volume, low margin businesses like grocery stores,” Dalton said in the release. “There is no doubt that these taxes will result in higher costs for our customers on all the basic items they need the most, like groceries, personal hygiene products including toilet paper, diapers, detergent, shampoo and toothpaste, and even their prescription drugs. We urge legislators to vote no on any grocery tax.”
The coalition projects that cost increases will have a ripple effect on a variety of key industries and will have significant cost impacts for consumers.
• Groceries: All retail grocery products will be impacted by the B&O surcharge, adding to the cost of essential needs, including, SNAP and WIC eligible food items, personal care products (toilet paper, diapers) and prescription drugs.
• Consumer goods: Tax increases on retailers and wholesalers drive up costs across the supply chain, raising prices on essential goods like clothing, personal care items, school supplies and household necessities, including groceries.
• Access to credit: Additional taxes on financial institutions could lead to tighter lending options, making it harder to acquire credit and loans — especially for homebuyers — at a time when Washington’s housing market is already under strain.
• Access to pharmacies and higher prescription drug costs: Increased taxes to prescription drug wholesalers will increase the costs for retail pharmacies to buy the drugs. This will increase costs for consumers and put small retail pharmacies at risk of closing due to price caps on reimbursements.
“If enacted, the tax proposals being considered in Olympia will only compound the impacts of higher costs and add to the economic uncertainty for retailers and consumers in our state,” added Renée Sunde, president and CEO of the Washington Retail Association, in the release. “Washington should not sacrifice affordability and jobs to address the budget deficit. We ask that lawmakers weigh the impacts on consumers and the economy as they work toward developing a sustainable budget by April 27.”
