MYNORTHWEST NEWS

Could your retail and online deliveries soon be taxed in Washington?

Jun 20, 2024, 1:22 PM | Updated: 2:43 pm

A proposed fee, or tax, may soon be added to retail and online deliveries in Washington. It could generate significant revenue for maintaining city and county roads.

State lawmakers are considering this option as they grapple with rising transportation costs and declining gas tax collections, which traditionally fund road maintenance.

“It’s one delivery fee per order,” consultant Andrew Mclean told KIRO Newsradio. “If an order contains multiple deliveries, it’s still one order.”

During a recent meeting of the Joint Transportation Committee, Senator Marko Liias, D-Edmonds, highlighted the transportation challenges faced by cities, counties and the state.

The proposed “retail delivery fee” would apply to taxable retail items delivered by motor vehicles, including packages from Amazon and goods shipped by companies like UPS.

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A study conducted by consulting firm CDM Smith examined the potential impact on consumers and businesses. It also analyzed the experiences of Colorado and Minnesota, the only two states with a retail delivery fee. In Colorado, the fee, enacted in 2022, charges 28 cents per delivery, generating $75.9 million in its first year. Minnesota’s fee, implemented in 2023, charges 50 cents for deliveries over $100, raising an estimated $59 million for cities and towns.

For Washington, the consultants evaluated various fee scenarios. If applied universally to all taxable items without exemptions, the fee could generate up to $112 million by 2026 and $160 million by 2030.

Alternatively, if the fee only applies to deliveries exceeding $75 and exempts retailers with less than $1 million in sales, the potential revenue drops to $49 million in 2026 and $70 million in 2030.

Lawmakers raised questions about fee administration and collection, emphasizing that it should not apply to non-taxable items like food and medical products. Representative Jim Walsh expressed concern, calling it akin to a sales tax, particularly impacting lower-income individuals.

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“I’m concerned that the fee falls into the category of being regressive despite the size of orders or average orders per household,” Walsh said.

Opponents, including the Association of Washington Business and Washington Retail Association, consider the proposed fee a burdensome “double tax” alongside existing sales taxes, according to the Sales Tax Institute.

Along with revenue generation, the arguments in favor of the fee include that a delivery fee distributes the cost of road maintenance more equitably. Currently, gas taxes disproportionately affect drivers of gasoline-powered vehicles. A delivery fee would spread the burden across a broader range of consumers, including those who rely on online shopping and delivery services.

Some argue by encouraging more efficient delivery practices, such as consolidated shipments and route optimization, the fee could promote environmentally friendly behavior. It might incentivize companies to adopt cleaner delivery methods, reducing emissions and congestion.

Bill Kaczaraba is a content editor at MyNorthwest. You can read his stories here. Follow Bill on X, formerly known as Twitter, here and email him here. 

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Could your retail and online deliveries soon be taxed in Washington?