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Petroleum Taxes, Storm Water Runoff Mix It Up in Washington

SEATTLE -- Washington state oil marketers are prepared to oppose the expected re-introduction of a state tax on gasoline to pay for storm water control.

Last April, drivers in Washington faced a 4-cent increase in the price of gasoline when the State House passed a $1.50 per-barrel tax on petroleum products at the refinery level to pay for stormwater control -- but the Senate declined to go along, and the bill was squashed.

The bill's supporters claimed that since petroleum products from cars make up the majority of the pollutants in storm water run-off, those same products should be taxed to correct the problem. Approximately $100 million would have been raised by the tax, with exemptions granted for crude oil, agricultural fuels, home heating oil and aviation and jet fuel. The bill required the Department of Ecology to develop criteria for administrating the program.

Lea Wilson, executive director of the Washington Oil Marketers Association (WOMA), said: "We believe petroleum taxes should be used to improve the state's transportation system -- not for distantly related purposes. If you're going to tax those who use the roads then those taxes should be used to serve those who foot the bill."

Charlie Brown, WOMA's legislative lobbyist and advocate, noted: "Our highways need repair, our bridges need maintenance and there are a multitude of projects that need funding to improve our transportation infrastructure; it would only put us further behind if we diverted taxes away from those areas."

Wilson and Brown expect the tax bill to be re-introduced when the legislature reconvenes Jan. 11, 2010. In that event they will be joined by a coalition of refineries, major oil companies and other transportation interests in opposition to it.

In the meantime, WOMA will also be working to modify the Business and Occupation (B&O) Tax. Unique to Washington State -- which unlike most states, does not have an income tax - the B&O Tax taxes the gross receipts of a business according to the value of its products, its gross sales and gross income. There are no deductions for labor, materials, taxes or other costs of doing business.

"Our goal is to modify the tax as it applies to our state's petroleum businesses so they can compete more effectively in the marketplace," Brown said. "As it stands now, the B&O Tax unfairly taxes the petroleum industry at several levels; we want a single tax that can be administered more effectively and applied more equitably."
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