Issues:
WA Hazardous Substance Tax
The HST Already Negatively Impacts the Tesoro Anacortes Refinery - The Governor recognizes the importance of our export-oriented economy, and should recognize that Washington’s refining sector cannot survive without sales to Oregon, California, and Alaska. Imposing a new six-cent per gallon tax on those export sales disadvantages our refinery in favor of foreign and other U.S. refiners, and result in lost sales. The refining industry should have the same exporting advantage as other industries such as Boeing or Weyerhaeuser.
What Profits? – The Governor has said this tax hike is “attractive” since the oil industry can “absorb” the increase in their substantial profits. Nothing could be further from the truth. Six refineries in North America closed in 2009 due to a sharp drop in demand for gasoline and diesel. Earnings for the petroleum industry are down across the board, with independent refiners experiencing record losses. Tesoro reported a $140 million loss in 2009.
The Industry Provides Tremendous Benefits - The Washington Research Council concluded last summer that a Washington refinery pays twice the tax of a similar sized refinery in California. The council also found the average wage for workers in the refining sector is $109,000 each year, and that one direct refining job creates 10 supporting jobs in the community.
The HST Increase is Being Proposed as the Only Way to Clean up Storm Water – Environmental activists claim tripling the HST is the only way to solve the storm water issue, knowing the majority of new money collected will fund the gaping budget deficit instead. This tax increase is the worst of both worlds for Washington refiners and consumers.
At best, it is a hidden six-cent gas tax for consumers as they will ultimately pay for the portion of the tax that is passed through in higher fuel prices. It is also horrible for the value added in-state refiners like Tesoro, as we would be forced to absorb the tax increase for out-of-state sales.
A Hidden Gas Tax Affects Washington Families and Jobs - Washington families already are feeling the impact from the recession with unemployment and home foreclosures on the rise. They already pay one of the highest gas taxes in the country at 37.5 cents per gallon. The State Department of Revenue estimates the proposed tax hike will cost consumers another six cents per gallon. Higher taxes on gas especially impact low-income families who pay a larger share of their incomes for fuel.
WA Refining Industry Accused of Not Caring About Storm Water - Refinery employees pride themselves on their environmental performance and great compliance record. Washington refineries have some of the best water treatment facilities in the state. The refining sector pays nearly 90% of the total HST collections and employees have watched the Legislature raid the HST account to pay for programs totally unrelated to storm water - to the tune of nearly $200 million. Washington drivers shouldn’t be forced to pay billions more in higher fuel costs because the Legislature has diverted HST account for unrelated uses. Is it fair that the refining sector and the driving public should be tagged with virtually the entire cost of funding storm water cleanup as well closing the budget gap?
HST Increase Encroaches on Transportation Funding – Washington has many needs, not the least of which is fixing our aging and crowded highways and bridges. These projects must be paid for with our federal taxes and state gas taxes. The proposal to triple the HST tax is likely to drive up gas and diesel prices in 2010 to pay for non-transportation projects. Will voters approve even higher gas taxes next year to pay for the desperately needed transportation projects?
Bottom Line – Jobs may be at Risk – SB 6851 / HB 3181 - A three-fold increase in HST puts jobs at risk. It will unfairly burden the Washington refining industry, which is already under stress due to narrow margins, and consumers under the pretense of fixing storm water problems – when the tax is actually going into the ever-growing general fund deficit.
An Unprecedented Tax on Washington Exports - HB 2816 proposes adding a 2.5 cent tax on each gallon of fuel sold across state boundaries. The bill sponsors want a “painless” tax to fund their pet projects, but this bill threatens the jobs of thousands of Washington workers.
An Export Economy At Risk - The Washington refining sector, including the Tesoro Anacortes Refinery, makes fuels for Washington drivers, and for consumers in Oregon, Alaska and California. As much as 40% of Tesoro’s output is sold outside of Washington. This proposed tax will jeopardize Washington’s export business, which is the strength of the state’s economy. Washington’s five refineries are a significant part of our export economy.
Exported Excise Tax Impact - It is not feasible to pass on an export tax to customers in markets outside of Washington. With the globally competitive refining business, out of state customers in Oregon, Alaska and California will buy fuel from refiners that do not suffer from a similar tax burden. If Washington refiners want to make the export sale, the 2.5 cents must come straight from the bottom line. Over the past several years Washington refineries have struggled to create a positive bottom line. In 2009 Tesoro posted a company-wide loss of $140 million.
Unfair Advantage to Out-of-State Competitors - Before this 2.5 cent tax was proposed, fuels manufactured in Washington already competed with fuels refined in California and in foreign countries. This competition has become more aggressive with giant new refineries beginning production in Asia and India. Sales are lost over the difference of one penny per gallon, so adding an additional 2.5 cent tax to the price of our fuel will tip the balance in favor of California and foreign refined fuel.
