January 15, 2018
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Bill to reinstate manufacturer B&O tax reduction introduced

The Association of Washington Business and a bipartisan majority of lawmakers -- a vote of 83-10 in the House and 33-16 in the Senate -- last summer supported a measure as part of the state budget deal to even out the business and occupation (B&O) tax rates for all manufacturers across the state. Unfortunately, Gov. Jay Inslee used his line-item veto power to scuttle the tax reduction as he signed the two-year budget bill in July.

Last week, Rep. Brandon Vick, R-Felida, introduced legislation to reinstate the lower B&O tax rate for manufacturing companies. House Bill 2393 would, if passed and signed by the governor, set the tax rate at .02904 for all manufacturers, the same preferential tax rate given to Washington’s aerospace manufacturers.

While not identical to the provisions passed by the Legislature last year, the bill is the start of a broader conversation in the Legislature and among the employer community on how to stimulate economic activity through support of the manufacturing sector in rural and economically-depressed regions across Washington.

“The Puget Sound economy is booming, and we want our suburban, rural and coastal counties to be experiencing the same economic prosperity. They face many challenges such as the Growth Management Act, the Hirst decision and other factors as they try to draw in employers to boost their local economy,” Vick said in a press release. “We had an opportunity last session to encourage manufacturing companies to locate in the regions where we need family-wage jobs and economic growth, but that ended with the governor’s veto.”

According to figures from the state Employment Security Department, manufacturing employment has dropped about 51,000 in 17 years, most of which were not related to aerospace, while jobs in other sectors have grown since 2000.

The bill has been referred to the House Finance Committee.

The Wenatchee World editorial board wrote in support of the B&O tax cut last week, saying: "The Legislature should also quickly pass legislation that both chambers approved last year, which would have lowered the business and occupation (B&O) tax rate by 40 percent for some 10,000 manufacturing firms across the state. The legislation would have given those manufacturers — mostly small- and medium-size companies — the same rate granted to Boeing and other aerospace companies."

For more information on this issue, contact AWB Government Affairs Director Clay Hill at 360.943.1600.

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Fix Hirst, Support Manufacturers

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The Puget Sound region's economy is booming. But across the state, the post-recession economic recovery has been uneven. Much of rural Washington is still struggling, with higher rates of unemployment and comparatively modest economic gains.

Fixing Hirst and delivering tax relief to manufacturers will help expand our state's prosperity to rural counties.

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