OLYMPIA, Wash. – A controversial new bill drafted by lawmakers to modernize Washington’s excise taxes to fund public schools, health care, and social services has cleared the State Senate.
The proposal includes extending the retail sales and use tax to certain services such as information technology consulting and temporary staffing services along with imposing a tax on nicotine products under the “other tobacco” products tax.
The bill would also impose a one-time prepayment requirement for businesses with $3 million or more in taxable retail sales during 2026. These businesses would need to prepay 80% of the state sales tax collected in June 2027 by June 25, 2027, with the remaining amount due by July 26, 2027.
Proponents argue that the bill is necessary to generate revenue for essential state programs.
“It’s making sure that our tax code is updated every once in a while to reflect our modern economy and make changes like I just mentioned,” Sen. Noel Frame (D-Seattle) testified on the Senate Floor April 19 in support of her bill. “As more and more of our economy happens with computers and technology this bill is doing the work to modernize the tax code to match. It’s a good government update to make our tax code more appropriate for the 21st century.”
However, some critics express concern over increased consumer costs and administrative burdens on businesses.
“There is nothing modern about increasing costs to child care and long term care as this bill will do,” Senator Nikki Torres (R-Pasco) testified. ”This bill hurts everyone, not just the wealthy. This self-tax is regressive and it’s kind of funny to keep hearing the word modernization because when the majority wants to increase self-tax, they call it modernization. But it’s not, it’s regressive.”
The bill’s supporters and opponents include a range of voices from different industries, including health care, retail, and hospitality.
SB 5814 passed the Senate 27-22 on April 19. It now goes to the House for further review, discussion and consideration.
