Oregon Lawmakers have advanced a proposal that would establish a new hidden sales tax in Oregon. Much like the ill-fated Measure 97 (2016), HB 3427 establishes a gross receipts tax that will result in a pyramiding tax effect on Oregon businesses and significantly increase the cost of living in our state.
Lawmakers advanced the bill with minimal consideration of the final language and after rejecting alternatives that would have minimized negative impacts under the proposal. The Oregon Education Association, claims House Bill 3427 would be the largest education investment package in Oregon history.
“This gross receipts tax is a hidden sales tax and has been rejected by Oregonians over and over again. It will negatively impact rural Oregonians and their businesses as it is regressive, and will hurt our lower-income working families the most,” said Representative David Brock Smith (R-Port Orford).
“Oregonians have spoken. They don’t want a tax on Oregon sales,” said Shaun Jillions, Executive Director of Oregon Manufacturers and Commerce. “This bill will have far-reaching consequences for consumers and businesses alike. With more than two months left in this session, there’s just no good reason to jam such a complicated tax policy through in such short order.”
One of the top concerns with HB 3427 is the inevitability of pyramiding. Under a gross receipts tax, businesses pay on tax on their total sales (not profits). That means that many businesses would be forced to pay this tax on sales on their business-to-business transactions. Economists have said consumers are likely to see higher prices for goods impacted under such a structure.
“Further, the scheme to lower the personal income tax is a fraction over what the pyramid increases will be on goods and services for our residents and their communities. Finally, there has been nothing done to stop PERS from taking all of these new tax dollars, with none going to students in the classrooms.” Representative Smith went on to say.
“There’s no debate about the realities of pyramiding under a gross receipts tax,” continued Jillions continued. “Producers will get hit at most if not every step of the supply chain, compounding the impacts of the tax and ultimately leaving businesses no choice but to pass these costs on to consumers in the form of higher prices. It’s a lose-lose. Let’s hope voters have an opportunity to weigh in on this proposal through the referendum process.”
Representative Smith also noted “It has not been tested, vetted or discussed, as the main bill was replaced less than two hours prior to the committee vote, and the needed data on impacts is still not available as we currently listen to the bill on the House Floor.”
Prior to passing HB 3427 out of committee, lawmakers adopted a “gut and stuff” amendment to the bill that was posted online less than an hour before the committee meeting started, leaving no opportunity for public testimony and little time for even members of the committee to review the bill’s language before voting on it.
“As a longtime school board member of one of the most economically depressed districts in the nation and now having ten rural school districts within my legislative districts, I have long supported funding education to students in the classroom. Unfortunately, I cannot support doing so by circumventing the voters of this state through HB 3427.” -Representative David Brock Smith (R-Port Orford)
HB 3427 now heads to the House floor for further consideration.
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