No one in Olympia appears to like the business-and-occupation tax — the state tax on gross receipts.

But other than adding exemptions, Washington’s Legislature has been reluctant to do anything about B&O taxes. Each session, changes get proposed. Each session, those proposals die.

“A silver bullet is not there because it is such a complex issue,” said Austin Neilson, government affairs director for the Tri-City Regional Chamber of Commerce.

The local chamber of commerce does not have a solid stance on what should happen to the state’s B&O tax.

“We just want to make sure the B&O tax is fair and easy to understand,” Neilson said.

Washington’s B&O tax has had a roller coaster history. The rate was 2.5 percent in the early 1990s, and then dropped to 1.5 percent in the mid-1990s under Republican legislative control. In 2010, Democrats bumped it up to 1.8 percent, a rate that sunset in 2013, dropping the tax to 1.5 percent again.

The 2017 session continues the Democrats’ trend of the past several years of proposing increasing the tax. 

Right now, Gov. Jay Inslee has proposed to increase the B&O tax rate from its current 1.5 percent to 2.5 percent, while exempting all businesses making less than $100,000 annually from the tax. That threshold would exempt roughly 38,000 of the state’s smallest services businesses — such as accountants, attorneys and other non-manufacturing and sales firms.

Meanwhile, roughly 170,000 businesses would still be liable for B&O taxes. Inslee’s plan on B&O taxes is predicted to raise an extra $1 billion-plus annually for education improvements.

So far this session, Republicans don’t want to tinker with B&O taxes other than a bill by Sen. Sharon Brown, R-Kennewick, to make manufacturing and selling modular reactors exempt from them — a tax break that will likely apply to the Tri-Cities if local plans to nurture that industry reach fruition. 

The Democratic controlled House has not yet unveiled its tax plans for the 2017 session, but proposed changes in the B&O tax structure are expected.

The reason: The Democrats are seeking new revenue to pay for education improvements in grades K-3 because of the Washington Supreme Court’s McCleary ruling that underfunding certain school measures is unconstitutional. For years, the Democrats have routinely sought some of the needed funding by tinkering with B&O taxes, with the GOP defeating such efforts annually.

Instead, the Senate Republicans recently unveiled a plan to greatly change the state’s property tax system, which would have the effect of increasing such taxes in the Seattle area and shrinking the same taxes in rural Washington. 

Senate Majority Leader Mark Schoesler, R- Ritzville, recently said overhauling the state’s B&O tax is highly complex as part of his caucus’ reluctance to embrace that idea on a major scale. And he argued that such a measure should be revenue-neutral — meaning any increase in B&O tax income must be accompanied by a similar decrease in other taxes.

Meanwhile, Mark Johnson, representing the Washington Retail Association, testified at an Olympia hearing that additional B&O taxes on service business will pass those extra costs on to customers. 

However, David Schumacher, director of the Washington Office of Financial Management, said the business-and-occupation tax has been routinely picked as a way to get new income as a large amount of money is needed to meet the McCleary requirements.

Shumacher noted that the service industry’s role in the state’s economy has grown significantly. In 1974, it made up 11 percent of the state’s economy, while in 2015 it made up 23 percent. During the same period, the manufacturing and wholesaling sectors’ shares have shrunk.