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Originally published Wednesday, February 27, 2013 at 4:00 PM

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Op-ed: Simplify B&O taxes without a state takeover

A state takeover of B&O tax collection would result in significant losses of revenue for cities forcing deep cuts in critical services, according to guest columnists Sally J. Clark and Conrad Lee.

Special to The Times

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DESPITE the conflict in Olympia this legislative session about who controls the agenda, everyone agrees we need to help businesses grow and create new jobs. As city officials, we hear from local business owners regularly that simplifying our license and tax-payment systems would be a big help.

In Seattle and Bellevue we are doing just that.

We want to do even more this year, but our progress faces an obstacle at the state level.

During the 2012 legislative session, the Association of Washington Businesses promoted an idea to simplify business-and-occupation tax payments by having a state agency take over collection from the cities. We believe the association saw this as a way to lower taxes for big corporations.

The association has decided to continue to pursue this by pushing a group of bills this session that will lead to a state takeover of local B&O tax collection.

Last year, its proposal was rejected because legislators saw that it would not simplify things. In fact, it would be more complicated for most businesses to implement and would require major changes in the state’s computer system.

Another sticking point was the price tag. The state’s own estimates revealed that a state takeover would cost millions at a time when legislators are struggling to find ways to pay for priorities like basic education.

Even worse, a state takeover would result in significant losses of revenue for cities, forcing deep cuts in critical services like road improvements, police and fire staffing, park maintenance and other local priorities paid for by general revenues. Our business owners depend on these services to keep their companies running, their locations safe and accessible, and to preserve the quality of life for their employees.

We don't need a state takeover to make things easier. We already offer microbusinesses a break from reporting or paying any local B&O taxes. We give special B&O tax deductions for nonprofits, research and development and international finance. We also have staff ready to help our business customers in person when they have a question.

That’s not all. We are moving forward with a plan that will make things even better. Five of the largest Washington cities have been working together on a multicity business license and tax portal, a one-stop website that will make it easier for businesses to get a business license and to pay local B&O taxes. It will provide more convenience, lower costs, access to more information and better customer support.

Gov. Jay Inslee recently praised our efforts. He told a meeting of city officials that our local portal is an important step toward tax simplification and government efficiency that will benefit businesses.

In fact, the portal will save businesses time and money. It offers a simple way for companies to report revenues and compute local B&O taxes they owe. Then, with a click of a mouse, businesses can pay what they owe. There will be no need to print and mail checks to multiple cities (with apologies to the U.S. Postal Service). Plus, businesses will no longer have to enter basic information separately for each city. Everything for all the cities they do business in can be done in one, convenient place.

The bottom line is that tax simplification is something we should all get behind. Cities have levied the local B&O tax since the 1930s and are better able to meet the needs of small and large businesses and nonprofits. Our new multi-city portal will simplify tax filing and protect our proven ability to meet local needs.

We all want to save money and be more efficient. But let’s not make things more complicated and waste state tax dollars on an expensive idea that will result in service cuts to people and businesses around the state.

Sally J. Clark, left, is president of the Seattle City Council. Conrad Lee is the mayor of Bellevue.


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