Building an Economy that Works for Everyone

This “hog” stinks: Biz lobbyists defend tax break while public services suffer

Hog fuel


The fate of special business tax exemptions is once again under consideration in Washington state – but not by state legislators. (At least, not yet.)

This time, a citizen commission is reviewing tax exemptions to determine their economic impact – that is, whether or not their special treatment can be justified by increased economic activity or a public policy priority. The commission is working from a recent report prepared by the Joint Legislative Audit and Review Committee (JLARC) which reviewed 25 tax exemptions, recommending one be terminated and two others left to expire.

In the “no good deed goes unpunished” category, business interest groups — whose profits are padded by these public subsidies — have swooped in to Olympia to defend their subsidies. From the Olympian:

Lobbyists from Longview Fibre, the Washington Forest Protection Association and the Northwest Pulp and Paper Association showed up to point out that legislative intent can be hard to define and that lawmakers were not actually intending to end the tax break.

The tax preference these lobbyists suited up for? A $3.2 million biennial sales tax exemption on “hog fuel” – essentially ‘waste wood’ from timber mills – burned for heat, electricity, steam or biofuel. JLARC found the tax break was passed without any way to measure its performance. Furthermore, their review found no evidence of increased economic activity due to the exemption:

JLARC found no readily available information to determine whether or not the public policy objectives are being achieved. While seven sellers of hog fuel reported using the sales tax exemption, JLARC did not find any evidence to indicate that the tax exemptions have promoted the use of hog fuel for the generation of electricity, steam, heat, or biofuel beyond what might have occurred without the tax preferences.

While the tax exemption for hog fuel is relatively small – $3.2 million every two years – it’s one of more than 500 tax exemptions on the books in Washington state. These 500+ exemptions give special consideration to everything from airplane fuel (cost: $300 million from 2011-13) to out-of-banks (cost: $173 million from 2011-13) – but at the cost of diverting public funds away from core government responsibilities like schools, roads and public safety.

With billions already cut from education, healthcare and social services budgets, it is more critical now than ever to review our spending priorities. Scarce public dollars should be prioritized for public infrastructure and education – not wood chips and out-of-state banks – so we can provide future generations new and better opportunities to succeed.

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