Sales tax threat in state of Washington

[couvsuds]

Just heard about it today from a fellow laundromat owner, so I'll post more details when I have them. But in a nutshell, the state of Washington, because it can't rein in its spending, is on a mission repeal just about any tax exempt business in the state ... which includes laundromats. The house AND senate are currently considering bills that would repeal the sales tax exemption for coin laundromats. The state CLA association hired a lobbyist last fall to roll up his sleeves and tackle this situation.

I'm told the CLA state association (and any coin laundromat owners) plan to meet with the lobbyist on Feb. 18 in Seattle.

The bills are SB 5857 and HB 2529. The web site is leg.wa.gov

I would guess most laundromats gross between 80-150K a year (obviously, some are larger and do much better). I can't imagine many can afford to take a $7-15K income hit without seriously cutting services, labor or equipment upkeep.

[CanCanCase]

Nick, the WA CLA affiliate is the place to be! If you don't mind, keep us filled in here too. I may see if I can make the Feb meeting just for my own information. I know our retread governor Dr. K has floated an OR sales tax idea before. I don't know it can ever gain traction here, but anything going on on your side of the river is awful close to home!

To me, the LAST thing any of these NW States need to be doing is anything that would cause business to cut hours or jobs. We just raised our minimum wage again here, and I just had to cut hours again. (Glad I build to run unattended, but that's beside the point!)

Seems to me it could also be argued that sales tax on laundromats is a tax on poor folks.

-Case

[Adamski]

... Seems to me it could also be argued that sales tax on laundromats is a tax on poor folks.

Case,

Absolutely. Any Sales Tax on laundromat service is a regressive tax that hits the poor much harder than it hits the middle or upper class. Since people with an in-home laundry would not pay the Sales Tax to wash their clothes; they get off Scott-free. The poor, who have no other option except to wash at the laundromat, would pay the full Sales Tax rate (probably with some additional rounding up of the tax to the nearest quarter or dollar). I think this fact is one of the best arguments against putting a Sales Tax on any laundromat anywhere in the country.

[mjwalsh]

because it can't rein in its spending, is on a mission repeal just about any tax exempt business in the state ... which includes laundromats. The house AND senate are currently considering bills that would repeal the sales tax exemption for coin laundromats. The state CLA association hired a lobbyist last fall to roll up his sleeves and tackle this situation.

I'm told the CLA state association (and any coin laundromat owners) plan to meet with the lobbyist on Feb. 18 in Seattle.

The bills are SB 5857 and HB 2529. The web site is leg.wa.gov



Nick & others,

From experience --- there were at least five of the "gross receipts" issue sessions in our State over the years --- I will say that each State has its unique characteristics. North Dakota has a history of healthy referendums which did make a difference.

1st step & goal is to get a "do not pass" recommendations from the committees that could potentially recommend those insidious 2 bills. If your State allows citizens to directly testify --- putting faces on the potential impact --- individual operators testifying --- can be more effective with the media-committee member juggernaut. There is no question that the CLA lobbying from both a state & national perspective can help. I will say that when I personally handed Brian Wallace's letter (15 minutes before the committee meeting) stating the CLA's perspective --- the chairman of the Senate committee seemed to think it was a reason to grin after glancing at it. The grin I saw was one that would show up on someone's face who was on a bit of a power trip. It was a good thing that the #2 person on the committee was very much on our side having been the chairman of a 2 year interim tax study that had the proper methodology.

What ever the Washington laundromat owners do they should not give up too easily. If the leglislators think & know that the laundromat owners are not bluffing that a healthy referendum could be in order --- it could help.

For example --- in our specific state back in 2002 the governor, banking industry & legislators were on a "mislead binge" on a bill that was overwhelmingly approved by the legislature & governor. Both the legislature leaders & the governor were going nonstop with their fear mongering & distortions of fact --- but the voters saw through them by a margin of 3 to 1.

http://alb.merlinone.net/mweb/wmsql.wm.request?oneimage&imageid=6178434

mike walsh king koin of bismarck

[couvsuds]

The laundromat owner who called me about this situation from the Seattle area told me he has designated one washer in his laundromat as the "this is what happens if a sales tax goes into effect on laundromats." He has three desktop computers in the store, and plans to post information as to how customers can get in touch with their local legislators about the situation. I'm going to contact our local senator and representatives about the situation, as well as local laundromat owners in our area.

When we had the state CLA meeting last September, we were all asked to donate whatever we could toward hiring a lobbyist. (With or without donations, they were going to hire the lobbyist regardless...but it would stretch the budget without donations.) As it was put to us...would you consider donating $200-500 toward hiring a lobbyist, knowing that if he's successful, it would save every store owner thousands in sales tax every year? For some in the business, it will definitely be the difference between staying in business and closing the door, at least in this economy. For others, it's definitely going to cause them to lay off some help, or put off new purchases, or forget them altogether. For me, I'm looking into buying a second store in the area, but I think I'll wait until I see what happens in Olympia.

Case ... as I hear more information, I'll pass it on.

[CanCanCase]

...it would save every store owner thousands in sales tax every year...

Be careful how this is worded. Politicians are playing class warfare these days, and I, for one, don't want to be seen as a "big business that refuses to pay a tax" - especially when the tax is needed "for the children and education!"

The fact is, a sales tax is a "pass-through" tax... it's supposed to be the purchaser of the goods or services that pays the tax, not the store owner. Of course, if the customer has to pay more because of the tax, then logically revenues go down and the store owner really IS the one losing out. But most can't see business practices that deep.

The argument needs to be made that margins are already thin. Therefore if an additional tax is placed on laundromat sales (in any form) it will force a price increase for the laundromat to stay in business.

-Case

[couvsuds]

Be careful how this is worded. Politicians are playing class warfare these days, and I, for one, don't want to be seen as a "big business that refuses to pay a tax" - especially when the tax is needed "for the children and education!"

The fact is, a sales tax is a "pass-through" tax... Yeah, you're right on that one. My bad. When I talk to the local officials, I will make it clear that is a tax on lower income people, and that I'll be looking to the Portland, Oregon area for my next store, rather than southwest Washington, should they stupidly repeal the exemption.

[Laundry_Station]

Hi, My name is Craig Wells I'm the newly elected President of the WSCLA and I've been on the phone most of the day letting laundry owners that they are at risk of losing their sales tax exemption. We tried to book a room at the Red Lion at SeaTac for the 18th but that day was already taken. Instead we are going to have the meeting Feb 11 @ 10am. Our lobbyist will be there to guide us and offer advice on how to proceed. I personally have met with one Senator and have appointments with two others. I have made over two dozen phone calls to laundry owners and was pleased to see that there was a posting on this bulletin board. When I was talking to Brian Wallace he told me about the posting.
The way to defeat this is to get involved. In my calls there were laundry owners who had some kind of relationship with a legislator, like one whose daughter is friends with a legislator or the one who goes golfing and a legislator is a regular. Use those connections. I am not going to roll over and throw up my hands.
My arguments to the lawmakers are that I will let people go whether it's night cleaning crew or the weekend attendant, I will not be able to purchase equipment and repairs will be deferred (pay attention distributors) and I will raise prices. I will have no choice.I also will eliminate the early bird specials, the free coffee, the fre soap day, Customer appreciation day and any other specials. Use your army of laundry customers to bug Olympia and they will get the message.

My taxes for my two laundromats will go up $2000 a month !!!! $2000 thats $24000 in year.I didn't work this hard this long so we can keep a bloated government.
So we have a meeting on Feb 11th @ 10am at the Red Lion at Seatac
18220 International Blvd.
We are asking for contributions for our lobbyist at this meeting. If you are not happy about paying 4 times more in taxes this meeting is for you.
Our lobbyist has been at this a long time and he knows how Olympia works.
It took 7 years to get this exemption with the hard work of Greg Tompkins and we have been enjoying it for years. Don't let it fade away.

Craig Wells
laundrystation@frontier.com

[couvsuds]

Craig ... you talked to me today. So thanks for calling and giving the heads up. I was able to contact one local owner today, who seemed indifferent ("we used to pay sales tax many years ago..."). I guess it won't wake up some people until it's too late.

Mind you, this is the same state that passed an initiative in November to allow certain retailers to sell liquor, only to have three of our finest legislators turn around in January and propose a bill to scotch the deal. Ridiculous waste of time. I don't know about other states, but we really need to go shopping for some new leaders in Washington.

[STOUT]

Craig ...

Mind you, this is the same state that passed an initiative in November to allow certain retailers to sell liquor, only to have three of our finest legislators turn around in January and propose a bill to scotch the deal. Ridiculous waste of time. I don't know about other states, but we really need to go shopping for some new leaders in Washington.

That should go for all cities, counties, states and federal areas that has the same name! :applause:

[Duane]

My taxes for my two laundromats will go up $2000 a month !!!! $2000 thats $24000 in yearI just wanted to point out one thing.... A sales tax will / should not cost a laundry owner anything unless you are foolish enough to not raise your prices. A sales tax is a pass through tax that is paid by the customer. All a laundry owner does is COLLECT the tax and then forward it to the government. To do this you raise your prices to cover the sales tax. And chances are when you raise your prices you will probably make MORE money. With a 7% sales tax you could raise your prices by just 25 cents and you will be making money on any vend price that was $3 and below. Any vend price that was above $3 would have a 50 cent increase. etc. etc...

Of course there might be some upfront costs associated with the price increase if you need new drops or slides.

Now don't get me wrong, I strongly oppose any sales tax on the self serve laundry industry. I just don't understand owners who think that they will be paying the sales tax out of their own pocket.

Duane.

[couvsuds]

Who is saying we don't understand that concept? Of course the customer pays the tax ... but you think they're going to willingly do it, and be understanding at the same time? Let's say I have a $6 machine that is due for a 25-50 cent increase for whatever reason (raising profit, increased utility or lease, etc.) To cover an 8 percent sales tax, you'll have to raise your price roughly 50 cents. You think the customer is going to stand for a .75-$1 increase? Sure, some will, but many will bitch, some will find a way to cut corners by going to a cheaper laundromat or jamming the washer and dryer with a little extra, and others will simply do their laundry at a relative's or friend's house.

As was pointed out earlier, you are not taxed to wash and dry clothing at your house. Why should you have to pay a tax to do it at a laundromat? This is not the same as a restaurant, where you pay a sales tax. The restaurant provides the food, cooks it, serves it, and cleans up after you. The laundromat is SELF SERVICE. I can buy a tax on WDF. But self service?

[jh]

Just heard about it today from a fellow laundromat owner, so I'll post more details when I have them. But in a nutshell, the state of Washington, because it can't rein in its spending, is on a mission repeal just about any tax exempt business in the state ... which includes laundromats...

Couvsuds,

Thanks for keeping us updated!
My first reaction was that if it happened here in NY, what would I be supposed to do? Raise the price and inform the customers that the government is now collecting tax on laundromat business? I bet 99% of them don't even know about the tax exempt part. They see laundromat owners as rich people having easiest jobs. Then they would be like "it's about time for the government to do the right thing!" If the government starts a public poll on whether or not to tax on laundry business, it would be like U.S. laundromat owner families against all other U.S. legal residents. We will not stand a chance.

The House and Senate want to see numbers. The Washington government will show that they have X million/billion of debts, that laundromat industry generates Y million/billion gross revenue annually, and that collecting tax on this industry will help pay Z million/billion debts each year. Arguments like "Many laundromat will go out of business." won't be convincing. They will want to see how many laundromats are struggling to survive, how many people will be pushed to the street looking for jobs if these laundromats go out of business, and how much it will cost the government to support these families while they have no incomes. A big number of signatures gathered from laundromat owners will help, too.

Yet first thing first, does it make sense to collect sales tax on laundry business? I, myself, am confused. We offer self-service, but don't we all provide a certain level of customer service even for unattended laundromats? Think about online business such as Amazon.com. They list products on the website. The website and its web-based software function as a huge stand-alone machine. The customers browse the product list, add items to carts, then enter payment information to purchase. Some states collect taxes. According to Amazon.com, "Items sold by Amazon.com LLC, or its subsidiaries, and shipped to destinations in the states of Kansas, Kentucky, New York, North Dakota, or Washington are subject to tax." Since these states collect tax on online sales, it is very likely that these states can collect sales tax on laundry business. Any thoughts? Wise opinions are needed to defeat "the EVIL". ;)

[Adamski]

... Since these states collect tax on online sales, it is very likely that these states can collect sales tax on laundry business. Any thoughts? Wise opinions are needed to defeat "the EVIL". ;)

John,

It actually is legal for any state to collect Sales tax on laundromats if they want to. However, doing so would put a heavier burden on all laundromat users while putting no burden on people who wash at home. That, in a nutshell, is the regressive nature of having a Sales tax on self-serve laundromats. There is no way any government can get around that issue unless they're going to somehow credit the tax paid back to the customers. If they did that, then what's the point of charging it in the first place?

Off the top of my head, this is a 20 billion dollar industry. If every state applied an average 6% Sales tax to all of our sales; the tax would amount to 1 billion, 200 million dollars for all state governments combined. That averages out to 24 million dollars per state.

[silver56]

Surprisingly my state of Illinois has not yet gone this route as they've managed to hike individual taxes by 66% and STILL find themselves behind on $6bn+ of bills.

I'm actually looking to relocate myself out of this state since it's in such dire shape and the political system here is fully controlled by unions and other special interests.

However, I do think there is a very strong argument that this would be a regressive tax on the poor. And from my experience in this s**t state, that's one argument that seems to carry the day with the dopes we have running things.

[rbh]

Here in MA, two years ago our politicians were kind enough to pass a sales tax in liquor, which previously was exempt (because its taxed to death prior to sale). People bitched but paid it. Well, the liquor industry got together and got enough support to put in on the ballot for voters to decide....and to my surprise, it was overturned. So now its done. Lasted exactly 1 year. So don't discount fighting it if it does happen.

[mjwalsh]

A sales tax is a pass through tax that is paid by the customer. All a laundry owner does is COLLECT the tax and then forward it to the government. I just don't understand owners who think that they will be paying the sales tax out of their own pocket.

Duane.

Fellow Laundromat Advocates,

In 1987 our state was running a huge supposedly insurmountable deficit. The governor & his party --- were pushing hard for sales taxes on laundromats along with all other services-labor etc. It was a good thing there was enough of us to put healthy logical tension on them to correct their approach.

One of the local car dealership (owner-leader) made a compelling argument at the committee hearing --- about the lengths that people go when confronted with rising costs to avoid seeking the mechanics who are more likely to be in a better position to do the sometimes intricate work on their cars. He went on to explain the compelling reality of safety factors. Almost every service had a citizen showing compelling considerations in the overflowing largest hearing room of our Capitol building. As many of us know... many similar arguments could & should be made on behalf of our industry.

In the early to mid 2000s there was a supposedly business friendly advocate group that put out an improper lack of info "survey". From that they stated business people preferred getting rid of our miniscule state income tax over broadening the sales tax to everything including laundromats. I talked to their lobbyist early on & during a extremely "fiery" exchange --- he actually screamed at me "what do you care --- you're not the one paying the tax!" Hopefully .... you see who was trying to bring out the "better angel" within the citizenry...

mike walsh king koin of bismarck

[Howard]

Its about time these states start taxing the poor! Heck, they are the ones that consume all the services. They don't pay any Federal Income tax anymore, so the government needs to get money out of them some way.

All kidding aside, I can see this argument both ways. These states spend so much money they don't have that they either need to cut programs or raise taxes. I for one favor cutting programs, but most want taxes raised -- assuming only the rich have to pay those increased taxes.

States already have a very regressive tax program - its called the lottery, its a great way for them to extract a tax from those least able to pay it - yet they do it.

Not sure I buy the service versus self-service issue either. If you were to go to most of the "poor" laundromat customers' homes I am sure you would find big screen TV's, dishwashers, air conditioning, carpet, etc... They could easily change how they spend what money they have and in many cases buy or rent a washer and dryer. They choose not to in many cases -- no one prevents them from buying such equipment. Well actually some landlords do, but that is a different story.

Further, as Duane pointed out a sales tax should be a good way for a laundry owner to make more money not less. Just like a few years ago when Natural gas prices soared we all complained yet we all blamed the evil oil companies to our customers where we then used that as a reason to raise our prices to more than cover the increased cost. I bet none of you have dropped your prices now that gas is a fraction of its peak cost -- I know for sure I did not. Further, a tax is something that if enacted would impact every store, so your competitor should not benefit from customers leaving your store in search of someone that does not charge it. If some store decides to absorb it, well they will just make less money as if they absorb any other cost.

I know our first gut reaction is to think this will hurt us, but in reality it should add to your bottom line as you will likely up the price by more than the tax.

[DaveLevenson]

NJ imposed sales tax on WDF (but not self-service) a few years ago, and exempted clothing. To comply with the laws here, we must collect sales tax when we wash dropped-off comforters, bed-linens, table-cloths, towels, napkins, etc., but not clothing. I posted a notice at my WDF counter explaining this, and suggesting that it would save customers some time at the counter if they placed clothing and non-clothing in separate bags for weighing-in. My notice ended with an apology, and the statement that the then Governor, Jon Corzine, probably never used a laundromat and certainly never worked in one.

One or two customers complained about paying the tax and I suggested that they send their complaints to their elected representatives in Trenton. I did not raise the stated price of WDF. I merely added the words: "plus tax where applicable" to the posted prices. The only significant impact has been the additional tax form which must be filed quarterly when the tax is paid over to the state.

[couvsuds]

An update on a push to repeal the sales tax exemption in Washington. Received an email today from a CLA rep regarding movement in the legislature:

Laundry Owners: Last Friday, House Bill 2762 (dealing with eliminating tax exemptions, including ours) was amended and voted out of the House Ways & Means Committee and is now eligible to be voted on by the full House of Representatives. By its actions, the Ways & Means Committee did two things that are important for you to know. First, they amended the bill to extend our tax exemption until July 1, 2023 (it was originally 2017); Second, they put an amendment on the bill that would send it directly to a vote of the people thereby avoiding provisions of Initiative 1053, which otherwise would have required a 2/3 vote of the legislature to pass. Now it can pass and go to the November ballot by a simple majority vote. If it goes to a vote of the people I suspect it will pass.

At this point I think it is critical that you call and/or email your legislators and tell them to oppose House Bill 2762 in its entirety; or, at least oppose Section 205 (2)(a) as it pertains to "self-service laundry facilities".