Majority of recent tax increases are temporary
A majority of the tax increases passed in 2009 and 2010 are temporary—scheduled to expire at the end of fiscal year 2013. These temporary measures will help to preserve essential services like health care and education throughout the downturn and recovery.
As the graph below shows, tax increases account for almost two-thirds of revenue measures passed in 2009 and 2010. The remaining 35 percent of revenue increases consist of compliance, technical clarifications, and other actions. These items are discussed more fully in yesterday’s post. Of those measures that actually increase taxes, 61 percent of the impact will be temporary.
Temporary tax increases include:
- Enacting a 0.3 percentage-point B&O tax surcharge on business services ($242 million);
- Extending the sales tax to certain purchases of bottled water($33 million);
- Imposing higher taxes on beer produced by large, multistate breweries ($59 million);
- Enacting a new, two-cents per 12 ounces excise tax on carbonated beverages ($34 million); and
- Suspending a sales tax exemption on certain equipment purchased by dairies ($1 million).
Permanent measures – such as the adoption of economic nexus – serve to improve the adequacy and equity of Washington’s overall tax structure.
These findings are part of broader Budget & Policy Center analysis of revenue measures enacted during the current biennium. Details of the major tax increases enacted in 2009 and 2010 can be found in Appendix Table B of the report.
