Washington Research Council report examines Initiative 1366: Cutting the state sales tax to 5.5 percent or amending the constitution to require supermajority for tax hikes

Now that Labor Day has come and gone, attention turns to the November elections. The Washington Research Council has just released a thoughtful analysis of I-1366. The key findings:

  • I-1366 would reduce the state sales tax from 6.5 percent to 5.5 percent unless the Legislature refers a constitutional amendment to voters for approval.
  • The constitutional amendment would require two-thirds legislative approval to increase taxes.
  • It would also require a majority vote of the Legislature for fee increases.
  • A supermajority was first required to raise taxes when I-601 was approved in 1993.
  • Since then, it has been suspended by the Legislature and reaffirmed by voters many times.
  • The state Supreme Court ruled it unconstitutional in 2013.
  • If the sales tax is reduced by 1 percent, it would reduce state revenues by $1.590 billion in 2015–17 and by $3.066 billion in 2017–19.
  • Such a loss of sales tax revenues would significantly impact the state budget.
  • Some may consider the crisis atmosphere created by a sales tax reduction an opportunity to increase other taxes or levy entirely new ones.
 This initiative is the only statewide ballot issue with major fiscal applications. Congratulations to the WRC for the unbiased analysis.