SALEM - A proposed statewide tax on businesses' sales would for the first time bring in revenue from out-of-state companies that sell goods in Oregon but have no physical address here, according to the Legislative Revenue Office.
Legislative revenue analysts discussed how the tax would work for different companies during an informational meeting of the Legislature's Joint Committee on Tax Reform Tuesday, May 9.
The committee will convene Thursday, May 11, to examine how the tax would affect particular industry sectors in the state.
The state taxes most companies with a corporate income tax, but federal law prevents the state from levying an income tax on businesses that sell in Oregon but have no locations here.
The .95 percent commercial activity tax proposed House Democrats last week would create a new tax base out of those companies. It's unclear how much revenue those companies would generate, because their sales are unknown.
The Legislative Revenue Office has estimated the tax would yield a net $2 billion in new revenue. That number is based in part on data from Ohio, which already levies a commercial activity tax.
The tax would replace the corporate income tax, which ranges from 6.6 percent to 7.6 percent, for those companies that already pay it. The tax is favorable to Oregon exporters who only would have to pay taxes on their in-state sales.
The .95 percent rate would apply to businesses with Oregon sales exceeding $5 million.
Proponents of the tax say the tax would bring more stability to the state's revenue stream, which can be volatile during changes in the economy. It also would help the state stave off spending reductions due to a $1.6 billion revenue shortfall.
Opponents say the tax is a sales tax in disguise and would be passed onto consumer in the form of higher prices.