In an effort to resolve a trade dispute with the World Trade Organization, Boeing has asked for a suspension of the aerospace tax incentive program. Although lawmakers have yet to act on the legislation and the budgets proposed earlier this week did not assume any gain in revenues, a fiscal note has been prepared calculating the revenue impact. The near-term bottom line:
This bill increases state revenues by an estimated $134 million in the 2019-21 Biennium and by $229 million in the 2021-23 Biennium. This bill does not impact local revenues.
Recall that when the incentives were extended in 2013, the package was estimated to amount to $8.7 billion in tax relief over 26 years, an estimate the Washington Research Council called a “wild overstatement” in a well-documented takedown of the calculations. The current fiscal note rests on much firmer ground.
The Seattle Times provides some perspective on the projected revenue boost.
While the proposed suspension faces some hurdles, as the Everett Herald reports, the Times story makes clear the consequences of inaction.
Boeing sees the move as a way to help resolve a dispute at the World Trade Organization (WTO) and avoid retaliatory trade tariffs. Those could affect not just Boeing, but also other Washington products, such as wine and shellfish.
“In the coming weeks, if Washington does not find a solution that ensures WTO compliance, tariffs will likely start later this year,” Bill McSherry, a vice president of government operations at Boeing, told lawmakers Tuesday in a public hearing on the new tax legislation.
The Herald quotes testimony the the state Commerce Department head.
At Tuesday’s hearing, Lisa Brown, director of the state Department of Commerce, said those tariffs could total $22 billion. Of that sum, $7 billion is targeted at the state’s aerospace industry, with roughly $260 million in tariffs on Washington fruit, seafood, wine and other non-aerospace exports, she said.
The Northwest News Network reports on some other plans for the projected new revenue and notes action is expected soon. The first Senate hearing was yesterday and a House vote could take place later today.