Oregon and Washington: A Sales Tax Relationship

With a quick flash of a state-issued identification, Oregon residents don’t have to pay sales tax on purchases in Washington State. Despite recent attempts to close the exemption, the legislation didn’t pass to keep all shoppers equal in the checkout line. The idea behind the exemption is to bring business across state lines so Washington businesses make more money from their neighbors and attract bigger crowds, especially for high ticket items like electronics and cars. The original group behind the exemption legislation passed years ago was made up of car dealers who were seeking more business.

Based in Clark County, right on the Washington-Oregon line, these dealers wanted to cash in on Oregon’s car shoppers with a competitive advantage since Oregon doesn’t have sales tax. It’s not an incentive to avoid sales tax for Oregonians but to draw in business to Washington. Oregon, however, is now also considering a sales tax measure of their own to solve their state’s revenue issues. House Bill 3074 moves to join Oregon with the Streamlined Sales and use Tax Agreement that many other states are already part of to generate revenue.

Right now the bill is before Revenue for an assessment to see if it’s an advisable move and what effects the new law might have on the state and it might not ever make it to a vote in the House, much less move through the process further to become a law. However, this move on the part of Oregon shows that there might be some really big changes in the future for both Oregon and Washington. If Oregon were to pass legislation to enact sales tax, Washingtonians might decide to push through an end to the sales tax exemption for shoppers from Oregon. But they also might decide that bringing business into their communities is more important than sales tax collections on Oregonian purchases.

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