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. Taxes, taxes and more taxes. Seems this is a attack on business who already pay for the roads in multiple ways. Not to mention often they create less wear because they can deliver many things on one trip. The better answer is to tax the electric vehicle owners more because they are becoming the biggest burden on roads. Oh but I guess that isn’t popular. I got it raise electric rates to cover the cost of roads and electrification of society. Instead of putting a unnecessary burden on business and consumers. When infact those services reduce miles driven.

  2. People driving EVs do not pay the excessive gas tax which is lowering available funds to maintain roads so why not institute a mileage tax on those vehicles to make up the shortfall since they too use the roads and cause more damage due to their heavy eight. That would be more equitable than taxing people who already pay the gas tax.

    1. Does my hybrid EV really weigh more than the giant, gas guzzling SUVs and the enormous pickups we see all over everywhere?

      1. Your hybrid EV drives the same roads, exacerbates the same pot holes and other road damage. Accept responsibility instead of acting superior because you could afford an EV – something not everyone can do.

        1. Please explain how I have acted superior or evaded responsibility. Do you consider those who buy even heavier and more expensive SUVs or campers as acting superior because they can afford them, something not everyone can do? Do you somehow consider it my fault if state government has not yet found a more equitable way to tax EV drivers?

          Perhaps it would be more productive to work on a solution to the actual problem rather than indulge ad hominem attacks on people you don’t know?

        2. Our hybrid EVs get all their motive power from the gas tank, none from electricity since they have no electrical plug-in. We pay the same gas tax as people driving non-hybrid vehicles. I bought our current Prius used, at a price equivalent to a similar age Corolla. So, enough already with the noise about accepting responsibility and acting superior.

  3. This is just another regressive tax where they take money from poor people to subsidize the lifestyle of rich people who drive EV’s.

    1. Gosh. I didn’t realize that buying an EV after a long life of working hard, I was rich and engaged in class warfare; I was laboring under the impression that I was buying a wonderful, quiet car with far less polluting emissions.

      1. Well I’m happy to enlighten you. EVs and hybrids are unfortunately not paying their fair share of road maintenance costs which is why there’s a shortfall. Those hard-working long living people who unfortunately cannot afford your lifestyle and have to drive an ICE vehicle make up the difference to subsidize you through the hefty road gas taxes. Understandly, you deny it because it wouldn’t make you feel better and at the end of the day driving your vehicle is mostly about your feelings apparently or you would be willing to step up and pay your fair share of road maintenance. Instead of stating how virtuous you are about being less polluting.

        1. You may be unaware that EV’s and hybrids pay an extra registration fee. Mine was $75, and as it’s a hybrid, I pay the same taxes everyone else does when I buy gas. If some equitable formula is found that evens out whatever share of road taxes everyone pays, I’m all for it.

          It’s wonderful how without knowing someone, you are able to discuss their “lifestyle.” Surely polluting less is a good thing, but I can’t see where I stated how “virtuous” I am. But as a long- living, hard working person myself, who was able to save up enough to by a car I like, I completely share your view that everyone should pay their fair share. So rather than attacking me for the car I drive, perhaps direct your efforts to state government and state regulations to ensure that we all pay a fair and equitable share. I’d certainly get behind any such adjustment – it might be more productive than lashing out at people you don’t know with the class warfare stuff.

      2. Just another way to hurt the low income. Liberals only now how to tax the citizens they supposedly represent.

  4. With the big push nationwide to eliminate
    Gas powered vehicles has the question ever
    Been posed to all the politicians about how they plan to dispose of all these electric vehicles and there batteries when they head to the junk

  5. Can’t impose any new “road tax” on EV’s right now…it would tarnish the hard push to get everyone on board!! So unfair how many years EV drivers have not paid anything toward roads.

  6. Are the companies whose trucks are delivering all those goods paying their fair share towards maintenance of roads and bridges? It’s their vehicles that have added extra traffic and wear and tear on our roads after all. Their businesses are booming these days.

    1. It’s a single optimized (now often electric) vehicle on the road all day making efficiently-routed deliveries vs. dozens of cars and trucks running to the store and back.
      It’s one (employed and productive) person hired to drive a truck all day vs. dozens of us unproductively sitting in traffic to run our errands.

      If we’re looking for efficiency in energy consumption and time, I think we’ve found it in online retailers, and it shows up in their growth and dominance in retailing. Like it or not, there are many good reasons why most retail stores are growing economically weaker.

      To blame (and additionally tax) online deliveries for excessive road wear, fuel use, etc. is, in my opinion, just another excuse for the state to skim the cream off of efficiencies that naturally arise as time and technology march forward.

  7. Let’s all jump on the EV’s are evil bandwagon. If y’all would do a little research before posting your comments you would know there already is an additional electric vehicle fee imposed for yearly tab renewal. In addition the majority of road usage fees are calculated using the weight of the vehicle to determine the cost of your tabs. Since EV’s generally weigh more they are already paying more than a similar petrol fueled vehicle. They are not getting the free ride as many seem to believe. Do you think the state would not be aware of the decreased gas usage trend and not find other ways to compensate for it? The article clearly states they are considering other ways to compensate for rising transportation upkeep cost as well.
    Most of the damage and wear to our roads are a result of constant heavy commercial vehicle usage. Other reasons include seasonal weather changes and temperature variations we experience in the PNW. To blame EV’s for a disproportionate amount of road wear and not paying their fair share is simply not true.
    On a side note while driving and walking I’ve observed a lot of vehicles with expired tabs. Drivers seem to feel they can get away with it now since the police have eased up on non-moving violations. I’m sure this has contributed as well.

    1. There you go, sufficiently increase vehicle tab renewals for Ev’s and hybrids so that they are comparable with other vehicles road usage costs. Then vote for leaders who will enforce expired tab violations. Problem solved.

  8. I don’t care what’s on the wheels, beyond weight and impact on the roads. If we’re looking at funds for road maintenance and repair, logic says weight and tire type are the factors to tax. So as a strawman, what would the ton-mile-per-tire rate be that recoups enough for the maintenance and repair? Get that right, or even close, and apply it to everything on the roads. A need to make special rules for a bunch of criteria is a sign of a poorly formulated system, at a basic level.
    If they also want to incentivize something, whether it’s EVs or horses or shopping at local brick-and-mortar stores, then make that a separate program.

  9. Sorry, but you all miss the most important fact…and it is not about EVs. It is about an insatiable appetite for more and more taxes for basics cities are supposed to provide. Someone should go back to Edmonds historical records and look at the percentage of the city budget that went for road construction and maintenance in 1950,1960 ,1970etc. I’m fairly confident of the trend you would see. It is so easy to simply put off most maintenance . Maybe a quick fix rather than a comprehensive fix. My 3 top priorities would be police fire and roads…in that order. Instead of increasing tax revenue, cut from the lower priorities. It may take a few years to get our roads back to where they should be but piling more taxes on us ?? Will it ever end???

  10. Why would anyone renew their tabs after the state took a vote of the majority of people to court and overrode our vote. The roads can turn to gravel as far as I am concerned. I will renew my tabs when the government honors the will of the people.

  11. Mr. Echelbarger is spot on. For this discussion EV’s are not relevant. It’s a tax on business that will be passed on to the taxpayer. It is a very regressive tax. We are inundated with taxes and pay more for taxes than we should. We need to elect people who will cut spending and cut the growth and cost of government. This will never happen with big government policy wonks like Marko Liias and Strom Peterson. They over regulate and over tax. We need common sense legislators not California clones.

  12. Wow! Instead of people focusing on the fact that one of the most common ways to shop at a huge convivence and cost savings across the board (including low income families, those without cars at all, parents who simply do not have time, products which simply cannot be found in stores, etc.) is potentially now going to be taxed because those same people proposing the taxing cannot appropriately manage the funds they already have for roads, we are at each others throats over EVs and road use taxes. Unbelievable. I thought reading the article itself was exhausting, but reading these comments makes me realize more than ever how far apart some people in the community are. Oh and back to the original point… this is a terrible idea. Lets audit the funds we have already before asking for more. Start there.

  13. This is a regressive tax. I am not going to criticize anyone’s form of transportation as I suppose all vehicles play a part in road wear. I remember when interstates had to be redone. When ramps to nowhere had to be taken out and I expect just like so many things here our state underfunds Highways and Interstates and Bridges and all of as well as I know the Highway patrol and on and on. Yet they fund many things that are essentially helping no one. It’s a shell game to me. So, the idea of annoying one of the very few large commerce businesses like Amazon seems silly. Boeing is on Trial right now. Many corporations have left our major city and probably more we just don’t notice. I don’t think anyone who uses Amazon will have a prob with under 100 bucks. Just do separate orders and Amazon should be better at adding items to one delivery at a home per day. The state does need to audit the funds they have now and have spent, and tell our citizens, then like Tom says Start there and stop being one sighted in our needs for all of WA State. Or lose your middle class and then you will see what happens. Interest rates won’t go down much I say 1/4% fall. STM up.

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.

By commenting here you agree to abide by our Code of Conduct. Please read our code at the bottom of this page before commenting.