CITY OF SEATTLE
ORDINANCE __________________
COUNCIL BILL __________________
title
AN ORDINANCE repealing the tax on gross income derived from the business of selling or furnishing water for hire to customers; amending Sections 5.48.050 and 5.48.060 of the Seattle Municipal Code.
body
WHEREAS, the Institute for Taxation and Economic Policy consistently ranks Washington State as one of the most unfair tax systems in the country, where lower-income residents pay a higher percentage of their household earnings for taxation; and
WHEREAS, the non-partisan Municipal Research Services Center defines a regressive tax as a tax burden (as a percent of income) that falls hardest upon low-income households, who have to spend a large portion of their income on retail goods and basic needs; and
WHEREAS, there are currently no tax rate limits prescribed by State law for water utilities operated by Seattle Public Utilities; and
WHEREAS, The City of Seattle most recently adjusted the water utility tax rate to 15.54 percent in 2011, which is in addition to the cost of providing water; and
WHEREAS, it is estimated the City will collect approximately $38 million in regressive water utility taxes in 2024; and
WHEREAS, signed by the Governor on May 4, 2021, Engrossed Substitute Senate Bill 5096 imposed a state excise tax on capital gains in excess of $250,000, with exemptions for retirement accounts and real estate sales; and
WHEREAS, implementing a local capital gains excise tax that conforms to State law is a more progressive method of taxation to replace revenues from regressive taxes no longer collected by The City of Seattle including, but not limited to, the tax on water within Seattle’s geographical boundaries; NOW, THEREFORE,
BE IT ORDAINED BY THE CITY OF SEATTLE AS FOLLOWS:
Section 1. Section 5.48.050 of the Seattle Municipal Code, last amended by Ordinance 124912, is amended as follows:
5.48.050 Occupations subject to tax-Amount
There are levied upon, and shall be collected from everyone, including The City of Seattle, on account of certain business activities engaged in or carried on, annual license fees or occupation taxes in the amount to be determined by the application of rates given against gross income as follows:
A. Upon everyone engaged in or carrying on a telecommunications service or telephone business, a fee or tax equal to six percent of the total gross income from such business provided to customers within the City. The tax liability imposed under this Section 5.48.050 shall not apply for that portion of gross income derived from charges to another telecommunications company, as defined in RCW 80.04.010, for connecting fees, switching charges, or carrier access charges relating to intrastate toll telephone services, or for access to, or charges for, interstate services, or charges for telecommunication service or telephone business that is purchased for the purpose of resale. (Such charges, except for interstate service, shall be taxed under Chapter 5.45.) The total gross income shall also include all charges by the provider of cellular or cellular mobile telephone services provided to its customers in any taxing jurisdiction (intrastate or interstate), which are billed to a “place of primary use” located in Seattle by or for the home service provider, irrespective of whether the services are provided by the home service provider.
B. Upon everyone engaged in or carrying on the business of selling, brokering, or furnishing gas for hire, a fee or tax equal to six percent of the total gross income from such business in the City.
((C. Upon everyone, including The City of Seattle, engaged in or carrying on the business of selling or furnishing water for hire to consumers, a fee or tax equal to the total gross income from such retail business in the City multiplied by the following rates:
Effective through March 30, 2009, a rate of 15.54 percent;
Effective March 31, 2009 through December 31, 2010, a rate of 19.87 percent; and
Effective January 1, 2011, a rate of 15.54 percent;
Provided that as to The City of Seattle in the conduct of its municipal water utility, such tax shall be applicable to the business of such utility done without, as well as within, the City.
D)) C. Upon everyone, including The City of Seattle, engaged in or carrying on the business of selling or furnishing electric light and power to consumers, a fee or tax equal to six percent of the total gross income from such business in the City. The fee or tax imposed upon the municipal light and power system of the City shall be applicable to the business of such system both within and without the City.
((E)) D. Upon everyone conducting or engaged in the business of supplying steam heat or power to consumers, a fee or tax equal to six percent of the total gross income from such business in the City.
((F)) E. Upon The City of Seattle and any port district, in respect to the conduct, maintenance, and operation of a drainage system as a public utility, a fee or tax equal to 11.5 percent of the total gross income from drainage charges. For purposes of this Section 5.48.050, “drainage charges” means, for The City of Seattle, the drainage charges provided for under City ordinances; and for any port district, the gross income from the conduct, maintenance, and operation of a drainage system as a public utility in the City.
((G)) F. Upon The City of Seattle and any port district, in respect to the conduct, maintenance, and operation of a wastewater system as a public utility, a fee or tax equal to 12 percent of the total gross income from wastewater charges. For purposes of this Section 5.48.050, “wastewater charges” means, for The City of Seattle, the wastewater charges provided for under City ordinances; and for any port district, the gross income from the conduct, maintenance, and operation of a wastewater system as a public utility in the City.
((H)) G. As to solid waste, see Section 5.48.055.
((I)) H. Upon everyone engaged in the business of operating or conducting a cable television system (CATV), a fee or tax equal to ten percent of the total gross income from gross subscriber revenues. For purposes of this Chapter 5.48, “gross subscriber revenues” means and includes those revenues derived from the supplying of subscription service, that is, installation fees, disconnect and reconnect fees, fees for regular cable benefits including the transmission of broadcast signals, and access and origination channels and per-program or per-channel charges; however, the tax liability imposed under this Section 5.48.050 shall not include leased channel revenue, advertising revenues, or any other income derived from the system, which shall be taxed under Chapter 5.45. The business of operating or conducting a cable television system (CATV) does not include the provision of interactive two-way communications over cable. Such activities shall be reported under the telecommunication service or telephone business classification.
Section 2. Section 5.48.060 of the Seattle Municipal Code, last amended by Ordinance 120668, is amended as follows:
5.48.060 City of Seattle subject to tax ((.))
Subsections ((5.48.050 C, D, and F)) 5.48.050.C, 5.48.050.E, and 5.55.050.C, Section 5.48.055, ((and Sections 5.55.050 C, 5.55.090 A and B)) subsections 5.55.090.A and 5.55.090.B, and Section 5.55.110 shall, so far as permitted by law, be applicable to The City of Seattle, except that the City shall not, as a taxpayer, be required to conform to the other provisions of this ((chapter)) Chapter 5.48.
Section 3. Sections 1 and 2 of this ordinance shall take effect on January 1, 2025.
Section 4. This ordinance shall take effect and be in force 30 days after its approval by the Mayor, but if not approved and returned by the Mayor within ten days after presentation, it shall take effect as provided by Seattle Municipal Code Section 1.04.020.
Passed by the City Council the ________ day of _________________________, 2023, and signed by me in open session in authentication of its passage this ________ day of _________________________, 2023.
____________________________________
President ____________ of the City Council
Approved / returned unsigned / vetoed this _____ day of _________________, 2023.
____________________________________
Bruce A. Harrell, Mayor
Filed by me this ________ day of _________________________, 2023.
____________________________________
Scheereen Dedman, City Clerk
(Seal)