Today if you purchase a copy of a movie, you pay sales tax on it. If you rent the same movie, you pay sales tax on it. Download the same movie? Pay sales tax. Stream it online? No sales tax. This disadvantages local rental businesses in favor of large out-of-state internet services, a disadvantage State Rep. Ross Hunter (D-Medina) of Kirkland’s 48th District says isn’t fair to our local small businesses.

Hunter, who chairs the House Finance Committee, spent two years on a task force with all of the stakeholders examining the issue of Washington’s tax code and how it relates to digital products including music, videos, books, video games, and more. Hunter’s HB 2075 makes several updates to how the state applies sales and use tax to these products.

“This bill is first and foremost about simplicity and fairness in our tax code,” says Hunter. “It isn’t fair when the same product purchased by the same person is taxed differently because of a different business model. Fairness and clarity are important to protecting both businesses and consumers.”

“There is a tremendous need for clarity in our tax code, particularly as it relates to the emerging world of digital goods. This bill is a good first step toward clarifying those discrepancies and implementing a fair approach,” said Amber Carter, government affairs director on taxation issues for the Association of Washington Business.

“We are hopeful any additional adjustments can be made in the Senate by the close of session. With the proliferation of digital goods and their impact on our everyday lives, it is integral that we resolve this issue this session. Washington state and the businesses that are directly affected by this tax issue cannot afford to leave this issue unresolved,” she said. “We support Rep. Hunter and his legislative colleagues for advancing this bill through the process this session.”

Hunter says his legislation accomplishes several goals:

· Ensures conformance with the national Streamlined Sales and Use Tax Agreement, a move that will keep Washington from losing tens of millions of dollars in revenue and ensure Washington remains an influential member state on the SSUTA Governing Board.

· Is revenue-neutral. This bill is not about raising revenue. While Hunter’s legislation imposes a sales and use tax on certain products, it includes exemptions and exceptions for numerous other electronic goods such as internet access, online education programs and online classified ads.

· Protects Washington businesses, particularly the high-tech sector.

· Provides clarity to businesses and consumers. Hunter points to the lack of clarity in the current tax code as the reason for numerous lawsuits, as the state Department of Revenue and businesses often disagree over how certain goods should be taxed.

· Makes durable changes to the tax code so it addresses technology changes over the next 20 years.

“The last time we made substantial updates to our tax code was 30 years ago,” says Hunter. “MP3s didn’t exist. Gamers didn’t exist. The world has changed significantly since then and so has the way we purchase all kinds of products. It’s time to make smart updates to our tax code to simplify the way we treat these new products and ensure a level playing field for our businesses.”

HB 2075 passed the House on a bipartisan vote of 52-46 and now goes to the Senate for consideration.