County, city calculate sales tax loss from ‘leakage’ to Oregon

Vancouver is losing out on more than $300,000 annually in vehicle registration tab fees, but that’s not the only financial loss the city endures when its residents hold on to Oregon identification.

The city could be missing out on $4 million in sales tax as a result of Washington residents keeping their Oregon driver’s licenses and opting out of sales tax at the register.

A recent city study found about 9.7 percent of licenses in Vancouver are from out of state. An accurate figure for losses is hard to pin down because there’s no way to calculate how many residents are using their non-Washington identification to avoid the 8.4 percent sales tax. But the study suggests there’s a problem.

“This ($4 million) would be in addition to the estimated $318,000 that the city is losing in license fee tab revenues from the same population group,” said Natasha Ramras, Vancouver’s Deputy Finance Director.

In the past, the city estimated lost sales tax by comparing its figures with those from comparable Washington cities not located near states without a sales tax.

“(We) determined that Vancouver is losing an estimated $10 million in sales tax revenue annually from residents purchasing large ticket items on the Oregon side,” Ramras said. “This larger number would include residents with Oregon IDs and those with Washington IDs shopping on the Oregon side.”

Clark County has a similar problem and measures its lost sales tax revenue the same way.

“Clark County is estimated to have 40 percent less sales tax revenues due to the leakage,” said Adriana Prata, Clark County Budget Director.

Looking at the county’s general fund, that’s a loss of $24.6 million annually – or about 15 percent of the total. The county also has a mental health and substance abuse program fund that collects a sales tax of one-tenth of one percent. Tax avoidance is costing that fund $5.3 million per year.

By law, residents have 30 days to get a Washington driver’s license after moving.

“But we have no way of knowing when a person moved from Oregon into Washington unless they come into an office to get a Washington license,” said Christine Anthony, Department of Licensing spokesperson.

Enforcement is an issue. At the moment, Vancouver is focusing on getting drivers with out-of-state plates to voluntarily register in Washington. But that is about to change.

Enforcement

Vancouver police recently participated in a training session with the Washington State Patrol to learn what they can do if they encounter a driver with an out-of-state ID.

“We let them into our process, how we do it and what’s legal,” said Trooper William Finn, WSP public information officer. “We want to provide an opportunity for everyone to gain compliance.”

WSP has a dedicated License Investigation Unit that monitors vehicles to find those in violation of the law.

If a car with out-of-state plates is spotted three times in a particular area, at a particular time of day, the driver will be stopped on the fourth sighting.

This tactic occurred en masse in Battle Ground last Friday. WSP targeted parents dropping off students at Glenwood Primary School and Laurin Middle School and cited seven of 30 targeted drivers for violating the law. One of those tickets costs $1,122.

Most of the time, a driver will produce a Washington license. But in some cases, troopers might see an Oregon license nestled in a driver’s wallet or the driver will offer an Oregon ID outright.

“That happens frequently as well,” he said.

The reasons are numerous. The driver might keep their old license for sentimental reasons, or to establish residency in Oregon for a potential benefit, or to avoid sales tax in Washington.

Although officers want to encourage compliance in lieu of citations, Finn said the financial impact to the city, county and state is undeniable.

“It trickles up,” he said. “There’s a lot of missing value there.”

Finn added that everyone who owns a vehicle in Washington is using the state’s services.

“It’s important we all do our part and we all follow the law,” he said. “Obtain a Washington driver’s license and register your vehicle legally.”