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UPDATE: This post has been updated to include Sen. Pam Roach's full letter to the state's attorney general's office.
Yesterday The News Tribune reported that Washington State Sen. Pam Roach sent an email to the state attorney general's office seeking an informal opinion on whether the roll-your-own cigarette tax included in Washington's new budget qualifies as a "new tax." As you'll no doubt recall, under Tim Eyman's I-1053, any new tax passed by the state legislature requires a two-thirds majority vote.
Lawmakers in Olympia got around that hurdle by saying the roll-your-own cigarette tax is simply clarification to a preexisting tax - an assessment Lt. Governor Brad Owen agreed with. Those in favor of the tax say it just closes a loophole in the state's tobacco tax, which currently brings in 15 cents per cigarette sold.
The roll-your-own cigarette tax is expected to bring in $12 million this coming year, helping to fill the state's reported $1 billion budget gap. Roach's note to the state attorney general's office expresses concern that the roll-your-own cigarette tax is a violation of I-1053, and that the move will inspire future violations of the voter-approved initiative.
Tim Eyman says the roll-your-own cigarette tax was passed in bad faith by the legislature and is a violation of I-1053. He says the tax, which he definitely classifies as "new," will foster further challenges to the initiative.
At this point Eyman says he has no plans to take action, except for (it seems) providing biting quotes when prodded by Seattle Weekly.
"The only action we're taking is pointing out how sneaky and underhanded the
legislature is," says Eyman. "It provides the 1000th example why this year's Initiative 1185 is necessary."
Find Roach's letter to the state attorney general's office on the following page ...
Sen. Pam Roach's Roach's letter to the state attorney general's office seeking clarification as to whether the state's roll-your-own cigarette tax constitutes a "new" tax:
Monday, April 23rd, 2012
Dear Mr. Pharris:
RE: Request for an informal opinion
There was a tax increase imposed on roll-your-own cigarettes during this year's legislative session. It was 3E2SHB 2565. The people and the press are asking about the bill (KING 5: Did state lawmakers pass a tax without actually calling it a new tax? http://www.king5.com/news/politics/Did-state-lawmakers-pass-a-tax-without-actually-calling-it-a-new-tax-148023655.html).
The definition of "raises taxes" in Initiative 1053 is: For the purposes of this chapter, "raises taxes" means any action or combination of actions by the state legislature that increases state tax revenue deposited in any fund, budget, or account, regardless of whether the revenues are deposited into the general fund.
The passage of bill was obviously an "action ... by the state legislature."
Under I-960, the state budget office (OFM) is required to identify bills that raise taxes (RCW 43.135.031 -- For any bill introduced in either the house of representatives or the senate that raises taxes as defined by *RCW 43.135.035 or increases fees, the office of financial management must expeditiously determine its cost to the taxpayers in its first ten years of imposition ... ). They did exactly that and determined that 3E2SHB 2565 was a tax increase under the definition of "raises taxes" (I-960 email alert sent out by OFM on February 8th, 2012 - http://listserv.wa.gov/cgi-bin/wa?A2=ind12&L=TAX-AND-FEE-PROPOSALS&T=0&F=&S=&P=107346 and numerous times during the bill's progress ending with a final I-960 email alert on April 16th after final passage in the Senate - http://listserv.wa.gov/cgi-bin/wa?A2=ind12&L=TAX-AND-FEE-PROPOSALS&T=0&F=&S=&P=259682). The state's determination that it was a tax increase under the definition of "raises taxes" spurred a 10 year cost projection on the bill and they determined that the final version of the bill will bring in, over the next 10 years, $786,000 in business and occupation tax revenue, $105,430,000 in cigarette tax revenue, and $10,807,000 in retail sales tax revenue.
The passage of the bill obviously "increases state tax revenue" to the tune of $117,021,000 over the next 10 years.
And the new revenue from this "action by the legislature" will go into the general fund, so it has been "deposited in any fund."
Besides the Office of Financial Management, the media had no trouble identifying this as a tax increase:
I request an informal attorney general's opinion that answers this very simple question: do the new taxes on roll-your-own cigarettes fit the definition of "raises taxes" from RCW 43.135.034/.035 (established by Initiative 960 in 2007 and then reaffirmed by Initiative 1053 in 2010)?
Given the self-evident nature of this tax increase, I am hopeful you can answer my question quickly. Thank you for your consideration of my request.
Sincerely, Sen. Pam Roach (R-Auburn), 31st District, firstname.lastname@example.org, Olympia office: 360-786-7660, home office: 253-735-4210
P.S. Regardless of the merits of this tax increase (I voted against it), it is important that the Legislature be honest about the bills that it passes (they weren't in this case) and follow the rules the voters require (the Legislature didn't in this case). I am very concerned that this violation of I-1053 (I was one of the initiative's co-sponsors) will only spur further I-1053 violations.