Lawmakers: Veto bank tax bill

Lawmakers: Veto bank tax bill
A bipartisan group of state lawmakers have written a letter asking Governor Jay Inslee to veto SHB 2167 due to both legal concerns and the lack of transparency before it was passed by the legislature. Photo: freepik.com

Several top-ranking Republican state lawmakers and a Democrat senator are calling on Governor Jay Inslee to veto SHB 2167, arguing it was passed by the legislature without proper transparency.

In a May 14 letter to Inslee, the bipartisan group noted that the bill, which raised the business and occupation (B&O) tax on banks from 1.5 to 2.7 percent, went from title-only to clearing the legislature within 50 hours. The tax is expected to raise $133 million during this biennium and $557 million through 2025.

“This was bad policy to start with,” Sen. John Braun (R-20) said in a statement. Braun is the ranking member of the Senate Ways and Means Committee. He was also one of the cosigners of the May 14 letter, along with House Minority Leader JT Wilcox (R-2), Senate Republican Leader Mark Schoesler (R-9), House Appropriations Ranking Minority Member Drew Stokesbary (R-31) and Senate Financial Institutions, Economic Development & Trade Committee Chair Mark Mullet (D-5).

“The fact that it was hustled through in little more than 48 hours makes it even less defensible,” Braun added. “That’s not how our state constitution intends for laws to be made.”

Also taken by surprise at the bill was the Washington Bankers Association, which previously told Lens the move sends a “chilling message” to business in the state.

Another criticism of the bill is that it violates the Commerce Clause because of how the bill taxes in-state and out-of-state banks. During the April 28 Senate floor vote, Mullet said “you cannot introduce an idea like this on the 103rd day of the session. It needs to go through more of a committee process.

“We can’t even get our own AG to give a valid opinion of this thing,” he added. “Our own committee staff is saying this would take one or two weeks to do a thorough analysis.”

The letter recalls a similar argument made by Inslee in the 2017 legislative session regarding tax cuts, when he vetoed a provision in the 2017-19 operating budget that would have reduced the B&O tax on manufacturers.  In his veto message, he said “these tax reductions should be considered in a thoughtful, transparent process that incorporates public input and business accountability.”

“We ask you to employ the same reasoning in vetoing SHB 2167,” the May 14 letter reads.

HB 2167 was delivered to Governor Jay Inslee on April 28, but has yet to be signed into law. He has until May 21 to veto it. If enacted, the bill would take effect July 28.

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