Central Oregonian

A comeback for the sales tax?

Three state legislators are proposing a sales tax as a part of statewide tax reform

Jason Chaney

January 07, 2013

For years, Oregon has remained one of few states without a sales tax.

Going into the upcoming 2013 session, three Oregon lawmakers have proposed a new comprehensive tax reform plan that would change that.

Democratic Senators Mark Hass (Dist.-14) and Ginny Burdick (Dist. 18), and Representative Tobias Read (R-Dist. 27) have proposed a plan that will reduce the state income tax and cut property taxes while enacting a 5 percent sales tax. They claim it would boost revenue $1.8 billion per biennium.

“What’s clear is our tax structure does not work currently,” Read said. “It produces more money than expected in good times and a lot less in bad times. That volatility is one of the things that really holds Oregon back.”

Read stressed that he does not support a sales tax without the property tax and income tax cuts, saying that the tax reform only works with all three components in place. He also emphasized that the plan would not result in higher taxes for most Oregonians.

“Because of the cash economy (people who are buying items that do not touch income tax) and tourists in particular, we generate about $1.8 billion more per biennium that could go into schools and infrastructure, and the things that will really make a difference in growing the economy.”

Representative Mike McLane (R-Dist. 55) does not believe that Oregon should institute a sales tax, particularly because the citizens have rejected it in the past.

“My view is the voters have spoken repeatedly that they are not interested in a sales tax,” he said. “I would be very likely to respect the voters and reject a sales tax.”

McLane said he will entertain ideas from his fellow lawmakers, but at this time, he does not anticipate changing his stance on the issue.

“It will be very difficult for me to see the merit in the sales tax proposal that would have the net effect of raising taxes on Oregonians who are already struggling to find good jobs and provide for families.”

Senator Doug Whitsett (R-Dist. 28) also considers the proposal a tax increase, saying, “At the end of the day, it results in $1 billion being taken out of the private sector and given to the public sector.”

He does not completely reject the idea of implementing a sales tax in Oregon, but does not believe it should exist to generate more revenue. Instead, Whitsett would consider a sales tax if it provided Oregon a more reliable tax income as opposed to property or income taxes, which tend to fluctuate with the housing or job market.

“I am willing to look at any form of revenue stabilization, but the two things that have to be in the package to accept it is first of all, it has to have a spending cap of some type,” he said, “and the second thing is it has to be revenue-neutral.”

Read called the recent proposal a “discussion starter” and hopes that the Legislature will consider some version of their tax reform plan in the coming session. He stressed that he will remain open to compromises and tweaks to the plan should other lawmakers suggest them.

As far as the timeframe is concerned, Read does not anticipate the recent proposal to take effect any time soon.

“I suspect that comprehensive tax reform in Oregon is going to take some time,” he said. “I think the sooner the better, but I don’t think that I have delusions about any of this being quick.”