To help fund roads, WA lawmakers eye fee on delivery of online purchases

(Courtesy of Pixabay)

A fee tacked onto the delivery of many retail and online purchases could generate millions of dollars a year for maintaining city and county roads in Washington.

State lawmakers now must decide if it’s an option worth pursuing as they, and local government leaders, wrestle with increasing costs of transportation upkeep and decreasing collections from the gas tax — the primary source of money for road work.

“Clearly our cities, our counties and our state have transportation challenges with too many potholes and too much traffic,” said Sen. Marko Liias, D-Edmonds, following Tuesday’s meeting of the Joint Transportation Committee, a bipartisan and bicameral panel that he chairs.

“This is one of a number of things we’re looking at to come up with the resources to make the needed investments,” said Liias, who is also chair of the Senate Transportation Committee.

Lawmakers heard details of a city-funded analysis of benefits and challenges of imposing a fee on delivery of taxable retail items by motor vehicles.  The “retail delivery fee” could apply to packages dropped off by Amazon, or consumer goods delivered by shippers like UPS.

Prepared by CDM Smith, a consulting and engineering firm, the report delved into potential impacts on consumers and businesses and provided estimates of how much money might be generated under different scenarios. It also looked at what’s happened in Colorado and Minnesota, the only two states with a retail delivery fee.

The study is not a policy proposal and is only intended to provide lawmakers with a baseline of information, said Andrew McLean of CDM Smith, who presented the findings.

It’s a pretty straightforward process as shown in the study. A consumer makes a retail purchase online that will be delivered by a vehicle. Retailers collect the fee as part of the purchase and hand it over it to the state. It would be up to lawmakers to decide how to spend those dollars.

This graphic from the June 2024 CDM Smith report gives an overview of how retail delivery fees work. (Washington Joint Transportation Committee)

Colorado, which enacted its fee in 2022, charges 28 cents on every delivery regardless of value. It generated $75.9 million in its first year for local and state uses, and clean transportation priorities, McLean said. Businesses with $500,000 or less in sales are exempt.

Minnesota enacted its fee in 2023 and it will be levied starting this July. The state will charge 50 cents only on deliveries of $100 or more. It will raise an estimated $59 million for cities and towns. The state exempts businesses with $1 million or less in annual sales.

For Washington, the consultants created a way to evaluate the potential revenue from fees ranging from a quarter to 75 cents. On Tuesday, McLean shared four that assumed a 30-cent fee and steady increases of e-commerce spending, which have trended upward in recent years.

When imposed on any order of taxable items and without any exemptions for retailers, it would generate as much as $112 million in 2026 and $160 million by 2030. If the fee is imposed only on deliveries of purchases exceeding $75 and retailers with less than $1 million in sales are exempt, the potential revenue drops to $49 million in 2026 and $70 million in 2030.

Lawmakers had questions on the administration and collection of the fee. They also made clear they would not want fees imposed on delivery of nontaxable items such as food and medical products.

Rep. Jim Walsh, R-Aberdeen, voiced concern it would have a disproportionate impact on lower-income individuals.

“I am concerned that this falls into that category of being regressive,” he said. “Does the study consider how to mitigate against the regressive nature of what in many ways will act like a sales tax?”

McLean said it was not part of the analysis.

A coalition of opponents – including the Association of Washington Business and Washington Retail Association – cite the issue in comments included as an appendix to the report.

“The doorstep tax is a double tax on top of one of the most regressive and highest sales taxes in the country,” they wrote. “While we acknowledge the need for innovative solutions to address environmental and budget challenges, taxing deliveries is not the answer.”

Liias said “it’s too early to tell” whether this idea will be pursued in the 2025 legislative session.

“This is the start of a conversation,” he said Tuesday. “This is not a done deal.”

by Jerry Cornfield, Washington State Standard

Washington State Standard is part of States Newsroom, a nonprofit news network supported by grants and a coalition of donors as a 501c(3) public charity. Washington State Standard maintains editorial independence. Contact Editor Bill Lucia for questions: Follow Washington State Standard on Facebook and X.

  1. I have a GREAT idea. Why don’t you, instead of taking our money, STOP SPENDING SO MUCH!!! Just saying. In household if finances get out of control the first thing you need to do is get on a budget with a commitment to STAY on it. Wouldn’t it be great for Washington state to show the other states how to manage our money the right way? That would benefit the entire country.

    We are on a fixed income. Which means we are not able to work and make more. You would think that politicians would be cognizant enough to recognize that. Add to the difficulties of getting out and shopping (we are talking about trying to find a cart, getting into the store, walking the aisles- sometimes in great pain.) I do NOT give you my permission to spend even more of my hard earned money. This is a stupid idea.
    The reason the taxes from the gas sales are drying up is because of the ridiculous non-thought out electric car mess. Put a tax on the sales of electric cars. We are going to need that to figure out where electricity is coming from with the damns being torn down, etc. and electric cars sucking up what power we do have. Come on people. Look at the whole situation instead of a band aid approach.

    1. I totally agree stop trying to take our hard working money including the ones that are on a fixed income so you know every penny counts stop trying to take money out of our pockets because you guys don’t know how to budget correctly and spend the money so we shouldn’t have to pay for your mistakes. I’ve been waiting way over a decade for one street to get fixed and instead you guys remodel half of 196th St now the whole which looks stupid just half so you really need to think about it because the moment you start talking about taking more money out of your people’s money just sounds more ridiculous than anything. Learn how to budget properly and add in case something happens you still have it covered instead coming up riping our money out of our hands that’s how more homeless happens stop being greedy and do what is right you should be trying to help put more money in our pockets not taking especially now days. Find a team who can spend money on a budget and keep it that way. Really you guys should have never brought that topic up sounds dumb and you don’t care about your people because at the end of the day you guys are gonna spend it on whatever you want not even necessarily to the roads so us the people are screwed so no i am totally against.

Leave a Reply

Your email address will not be published. Required fields are marked *

Real first and last names — as well as city of residence — are required for all commenters.
This is so we can verify your identity before approving your comment.