Business and Occupation Tax. Washington's major business tax is the business and occupation (B&O) tax. The B&O tax is imposed on the gross receipts of business activities conducted within the state, without any deduction for the costs of doing business. Businesses must pay the B&O tax even though they may not have any profits or may be operating at a loss. A taxpayer may have more than one B&O tax rate, depending on the types of activities conducted. Major B&O tax rates are 0.471 percent for retailing; 0.484 percent for manufacturing, wholesaling, and extracting; and 1.5 percent for services and for activities not classified elsewhere. Several preferential rates also apply to specific business activities.
Business and Occupation Tax Preference for Newspapers. In 2008 and again in 2012, the Legislature temporarily revised the definition of newspaper to include electronic versions of newspapers. The effect of this is that both the online version of a newspaper and the physical version of a newspaper were taxed at the B&O rate of 0.35 percent until July 1, 2015. In 2015, the Legislature clarified that the electronic version of a newspaper is a supplement to the printed newspaper, which creates a blended rate for reporting B&O taxes for newspapers. The B&O rate of 0.35 percent was extended through July 1, 2024. After this date the rate will be increased to 0.484 percent.
These businesses have to file a complete annual tax performance report with the Department of Revenue. The current tax preference is set to expire July 1, 2024.
The preferential B&O tax rate of 0.35 percent for publishing newspapers is repealed. Beginning January 1, 2024, businesses may deduct activities related to printing or publishing a newspaper, or eligible digital content, or both, from their B&O tax. A business claiming this preference must include the deductible amount in its gross income reported on its excise tax return.
Eligible digital content is defined as a publication that:
Eligible digital content does not include content created by a radio or television broadcaster.
The Joint Legislative Audit and Review Committee is directed to perform a tax performance statement for this tax preference.
This tax preference expires on January 1, 2035.
PRO: The local news industry is having a very difficult time. The goal of the legislation is not to quintuple the size of the tax preference, we are trying to assist these companies. The rate will go up if the preference does expire next year, and we have to do something. Local journalism provides a unique and important role in our communities. Fact based information on local issues are very important. There has been a dramatic change in the last ten years. There are a lot more empty chairs than there used to be in newsrooms. Advocates want to bring the tax credit preference down to zero, and this step recognizes the urgency of the industry. Everything we hold dear is dependent on this industry. Local journalism is essential to our democracy, and it is extremely expensive to produce. This bill will save tens of thousands of dollars for the Columbian. The decline in advertising has led to the decline of many newspapers, such as the Tacoma News Tribune. Local newspapers are vital to our communities. They publish legal notices and let us know what is happening in our communities. Many communities are losing their newspapers. There are a lot of news deserts across the country. When newspapers go away, public participation goes way down. Employment is down over 30 percent over the years. No one covers any of the 17 school districts in Pierce County. No journalist is assigned to the press corps. We've upset the entire applecart of Democracy by allowing local journalism to go by the wayside. We should not tax something that is struggling to survive. Journalism needs a boost anywhere it can.
OTHER: The League of Women Voters completed a study on how the decline of journalism is having an impact on our democracy.