Canadian visitors shopping for Washington souvenirs will soon find them costing less as of July 1. In fact, nearly every retail item will be cheaper for them.Our northern neighbor British Columbia (and also Ontario) is set to change methods of taxing, and in doing so has made residents eligible for sales-tax exemptions when visiting Washington state. The provinces are ditching their provincial sales tax in favor of a harmonized value-added tax, in conjunction with the Canadian federal government.
Washington state law allows tax exemptions for residents of states and provinces where the sales tax rate is three percent or less. Since the new Canadian taxing structure isn’t technically a sales tax anymore, BC will join our southern neighbors in Oregon as being tax-exempt here.
This could be a boon for northern Washington retailers that might see an influx of Canadian shoppers, but it will certainly hamper the budgets of local governments and the state. Officials learned of this news on Tuesday afternoon, just a few weeks before the new tax is set to take effect, catching them by surprise. The City of Bellingham, for example, could see anywhere from a $400,000 to $1 million budget hit each year. Canadian visitors will continue using local infrastructure but their tax revenue will now be gone, essentially forcing local jurisdictions to do more with less. The impact to the state's revenue is unclear at this point.
For more, check out coverage on both sides of the border, at the Bellingham Herald and Vancouver Sun. See Bellingham Rep. Kelli Linville’s thoughts on the matter here. You might also recall efforts last year to end the out-of-state tax exemption—more on that here.
(Photo by Jessica Rabbit @ flickr)
