Commercial Activity Tax Passes Committee – OBI Stands Down

A dramatic turn of events last night. At the 11th hour, Oregon Business & Industry testified to their neutrality on a gross receipts tax that will levy over $2 billion in new taxes on all businesses with sales above $1 million. The committee became nearly jubilant and proceeded to pass HB 3427 on a party-line vote with 10 democrats supporting and 6 republicans opposing.

Here are the specifics of the legislation:

  • Tax rate of 0.57% on Oregon sales above $1 million;
  • 35% deduction for labor or business inputs;
  • An exemption for receipts from sales to a wholesaler or ag cooperative for any sales outside of Oregon; and
  • An exemption for groceries (defined as those that qualify for ‘SNAP’).

The reason that the tax bill changed since yesterday is that HB 3427 is now part of a negotiated package that will also contain:

  1. A new paid family leave program that will include a 37% employer / 63% employee cost share. Details are not yet defined.
  2. A PERS reform proposal that is yet to be defined (although we understand we will be learning more details this week).
  3. HB 2269 (employer health care tax) will die.
  4. Cap & Trade (HB 2020) will be negotiated separately and is not part of the deal.

OSCC has yet to take a position on the terms of HB 3427 or the rest of the package.

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