House Democrats today dropped a proposal to permanently extend a beer tax that’s due to expire this summer.
They also killed proposals to eliminate a tax break for stevedoring, impose a sale tax on janitorial services and eliminate a tax exemption for insurance agents. Combined, the proposals would have raised around $165 million in additional tax revenue.
The beer tax, worth nearly $60 million over the next two years, was the biggest proposal eliminated as Legislators work their way through budget negotiations in the final week of the regular session.
The proposal would have extended the current tax on beer, but reduce it from 50 cents to 25 cents per gallon for mass market beer and charge microbreweries a rate of 15 cents per gallon.
House Finance Committee Chairman Reuven Carlyle, D-Seattle, said it was dropped because the beer lobby proved particularly effective in swaying legislators. “Just the viability of the large commercial scale beer companies to fund an initiative” to challenge the tax, he said, adding that “$10 million to them is a walk in the park.”
Dropping the beer tax and others proposals should help ease passage of a tax package through the House, Carlyle said. Although the GOP-led majority in the Senate has argued no new tax revenue is needed.
With the reductions, Democrats are proposing $899 million in new revenue. The taxes were passed out of the Finance Committee on Tuesday.
Roughly $365 million would coming from the repeal or reduction of tax breaks. The rest would be generated by a proposal to permanently extend a 0.3 percentage point increase in the business-and-occupation tax rate paid by doctors, lawyers, accountants and others. The tax rate would increase from 1.5 percent to 1.8 percent of gross revenue, under the proposal.