OLYMPIA — April 9, 2025 — A broad coalition of small, medium and large Washington businesses are calling on Gov. Ferguson and leaders in the Washington State House and Senate to reconsider both the number and scale of proposed tax increases this session, warning of negative impacts on jobs, business retention and consumer costs.

In a letter to the governor and legislators, 123 businesses and industry groups are urging lawmakers to use caution in advancing significant tax proposals to resolve the state’s $16billion budget deficit. The response, coordinated by the Washington Food Industry Association, Washington Retail Association and the Northwest Grocery Retail Association, comes on the heels of the governor’s April 1 press conference about the state operating budget.

“Like the Governor, we believe it’s time to move budget discussions in a new direction that avoids compounding economic uncertainty,” the letter states. “We also urge you to consider the growing chorus of concern from local elected officials who are sounding the alarm about the destabilizing effects these tax increases could have on job markets, business retention, and overall economic health. Just as importantly, they recognize the direct impact these proposals would have on their constituents—working families already facing high costs for basic needs such as food, housing, fuel, and health care.”

Of greatest concern for the coalition: a proposed change in the B&O tax surcharge. While lawmakers may have targeted larger corporations with the change, the effects will be felt the most by small- and medium-sized businesses, which will pass cost increases directly onto consumers.

Washington Food Industry Association President & CEO Tammie Hetrick said independent grocers, neighborhood markets and convenience stores are already struggling to stay competitive with existing inflation concerns and new tariffs.

“Our member stores cannot continue to absorb additional costs, and unfortunately, that means consumers will pay more,” aid Hetrick. “Independent grocers are trying to keep costs down but given all the other increases – including utilities, insurance and employee costs – those increases are ultimately reflected in higher prices for consumers. We need a more sustainable approach to addressing the state budget.”

Amanda Dalton, President& CEO of the Northwest Grocery Retail Association, representing Washington’s grocery retailers and vendor and supplier partners, expressed similar concerns about cost impacts.

“Gross receipts taxes, like the ones before the Washington Legislature, are devastating to high volume, low margin businesses like grocery stores,” said Dalton. “There is no doubt that these taxes will result in higher costs for our customers on all the basic items they need the most like groceries, personal hygiene products including toilet paper, diapers, detergent, shampoo and toothpaste, and even their prescription drugs. We urge Legislators to vote no on any grocery tax.”

Cost increases will have a ripple effect on a variety of key industries, and will have significant cost impacts for consumers, businesses warn, including:

·        Groceries: All retail grocery products will be impacted by the B&O surcharge, adding to the cost of essential needs, including, SNAP and WIC eligible food items, personal care products (toilet paper, diapers), and prescription drugs.

·        Consumer Goods: Tax increases on retailers and wholesalers drive up costs across the supply chain, raising prices on essential goods like clothing, personal care items, school supplies, and household necessities, including groceries.

·        Access to Credit: Additional taxes on financial institutions could lead to tighter lending options, making it harder to acquire credit and loans – especially for homebuyers —at a time when Washington’s housing market is already under strain.

·        Access to Pharmacies and Higher Prescription Drug Costs: Increased taxes to prescription drug wholesalers will increase the costs for retail pharmacies to buy the drugs.  This will increase costs for consumers and put small retail pharmacies at risk of closing due to price caps on reimbursements.

When viewed in consideration of other current market forces, including the impact of new tariffs, additional tax increases at the state level are likely to further compound the skyrocketing costs for almost all essential consumer goods, including food, shelter and housing.

“If enacted, the tax proposals being considered in Olympia will only compound the impacts of higher costs and add to the economic uncertainty for retailers and consumers in our state,” added Renée Sunde, President/CEO of the Washington Retail Association.

“Washington should not sacrifice afford ability and jobs to address the budget deficit.  We ask that lawmakers weigh the impacts on consumers and the economy as they work toward developing a sustainable budget by April 27.”