Local News

After years of talk, Congress is moving toward possibly ending a loophole that has prevented states from collecting sales taxes on many Internet purchases.

The U.S. Senate could vote this week to approve the Marketplace Fairness Act, which would end the longstanding tax advantage enjoyed by Internet retailers like Amazon.com over their brick-and-mortar competitors.

The proposal, which passed a test vote Monday in the Senate, would require companies with sales of more than $1 million to begin collecting sales and local taxes for purchases over the Internet.

That could mean a big windfall for the Washington state treasury – bringing in an additional $184 million for the 2013-15 budget, according to an estimate by the state Department of Revenue. That would rise to more than $567 million in 2015-17 as compliance ramps up, the state predicts. Cities and counties would also get a share – more than $278 million by 2015-17.

But lawmakers currently haggling over the state budget are not expecting that money to bail them out — at least in the short term.

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King County officials are pushing legislation in Olympia that would allow them to raise the local sales tax to pay for human services and public safety expenses — without asking for voter approval.

Counties are currently allowed to ask voters for a public-safety tax increase of up  to 0.3 percent, and 10 counties have successfully won approval of such a tax.

But in 2010, voters in King County rejected a proposed 0.2 percent sales tax despite warnings from elected officials that if more money were not found, sheriff’s detectives, prosecutors and probation officers would have to be laid off. The measure would have raised about $50 million a year for the county, with an additional $33 million divided among local cities.

House Bill 1919 would allow the Metropolitan King County Council to impose a similar tax increase without voter approval.

The bill’s chief sponsor, Rep. Joe Fitzgibbon, D-Burien, said in an email that criminal justice and human-services advocates in King County have asked for the measure.

“For me, there is a basic principle of representative democracy that legislative authorities should be able to make budgeting decisions such as the enactment of the public safety sales tax,” Fitzgibbon said.

Fitzgibbon added that cuts to public safety to areas he represents, such as White Center, “have been so severe they have put members of the public in danger.”

Frank Abe, spokesman for King County Executive Dow Constantine, said there are no immediate plans to pursue a sales-tax increase.

“This would just be an option, a tool in the toolbox,” he said.

County Councilmember Julia Patterson said even if the bill passes, the council would have to carefully consider whether to bypass the ballot for a tax increase.

“We would have to do a lot of very hard work to propose that this money be used in a way that the public could completely understand and support,” Patterson said. “I think if there is uncertainty, the ballot is the way to go.”

Barbara Langdon, executive director of LifeWire, which provides services to women fleeing domestic violence, testified in favor of the bill at a public hearing this week, saying her organization has had to turn away women due to budget cuts.

“We have no other resources. There is no place else to go,” Langdon said.

But the proposal was opposed at the hearing by business lobbyists who cited the effects of sales-tax increases on small businesses.

Fitzgibbon’s bill is scheduled to be voted on in the House Finance Committee on Thursday morning, but its prospects of advancing in the Republican-controlled state Senate are uncertain.