The Senate Economic Development, Trade & Innovation Committee on Wednesday gave a “do pass” recommendation to a bill introduced by Sen. Mike Padden that would bring much needed relief to new businesses.
Senate Bill 6327 would create a one-year exemption from the state business and occupation (B&O) tax for all new businesses and a two-year exemption for new businesses employing fewer than 25 people, plus a 50 percent exemption in the third year.
“I am very pleased to see that this major reform is still alive for this session,” said Padden, R-Spokane Valley. “New and small businesses are crucial to Washington’s economic recovery and this measure would go a long way toward helping these businesses grow, take risks and invest in jobs for the people of this state.”
In 2009 the Department of Revenue estimated that as many as 90,000 businesses would be launched and receive the one-year exemption over the first four years after passage. Of those, the agency estimated that 40,000 would be small businesses eligible for the two-year waiver.
“Washington has the third-highest business-startup rate in the nation and the second-highest failure rate,” said Padden. “We are also one of the few states with a tax on gross receipts. This is not a coincidence.
“Research from such groups as the Washington Policy Center and the National Federation of Independent Business has shown the inherent unfairness of the business and occupation tax and its potential to be a deterring factor in job creation and growth.
“This measure would make it clear to entrepreneurs inside and outside of the state that legislators want our small-business employers to succeed and that Washington is open for business.”
Senate Bill 6327 now goes to the Senate Ways & Means Committee. It has until Feb. 14 to pass out of the Senate.