Adam Kovacevich: Washington is eyeing a delivery tax to fund roads, but the idea is full of potholes

Last year, as Seattle weighed a wage floor proposal for food delivery drivers, a chorus of opponents warned that the policy would drive up prices, harm local businesses, and hit consumers already feeling the pinch of inflation. Local lawmakers should have listened.

Seattle is now considering rolling back the policy – barely six months after its enactment. But even after Seattle’s law backfired on city legislators, state lawmakers could end up making the same mistake all over again by sparking a price hike on delivery for everyday essentials.

Earlier this summer, state legislators commissioned an analysis examining the impact of a new tax on online purchases. With gas tax revenues declining, policymakers were interested in raising a new fee on online orders to fund infrastructure projects.

Washington lawmakers should know better. Online delivery taxes would disproportionately impact vulnerable populations, add more cars on roadways, increase emissions, and strain local businesses.

There’s no way around it: delivery taxes are inherently regressive. They hurt working families by eating up a larger share of their income – while wealthy families might barely register the added fees. They disproportionately impact older people and mobility-challenged individuals who rely disproportionately on delivery for essential goods.

There’s also an environmental toll. By disincentivizing online orders, delivery taxes can end up causing more traffic, higher emissions, and higher gas costs for consumers and workers. Imagine if instead of one UPS truck delivering 200 purchases, there were 200 additional cars on the road making individual trips to the store. New research from my organization, Chamber of Progress, found that e-commerce delivery is more than twice as efficient as individual car trips.

It’s ironic that delivery taxes are intended to fund roads when, in reality, they end up incentivizing more road use.

Washingtonians deserve a real, sustainable solution for poor road conditions. And lawmakers should think twice before burdening citizens with a regressive tax, all to put a Band-Aid on a gaping budget deficit. Just look at how delivery taxes have gone over in other states.

Last year, New York Democrats scrapped a plan to include an online delivery in the Assembly’s proposed budget, recognizing how the proposal would hike prices for the people who can least afford it. New York’s proposal sparked criticism from national lawmakers who highlighted how it would unfairly target the poor and working class.

In Maryland, legislators abandoned a proposal to add a 50-cent fee to the cost of every online grocery, retail, and takeout order, following backlash from voters who overwhelmingly opposed the fee.

Colorado and Minnesota, the two states that have actually succeeded in enacting a delivery tax, offer even more cautionary tales. Colorado’s rollout of the fee was so disastrous for local businesses that legislators had to simplify the law to help companies comply. And the Minnesota business community is bracing for impact after the state’s 50-cent tax took effect in July.

In Washington, businesses are already sounding the alarm on how delivery taxes could destroy local economies by reducing consumer spending power and dampening demand. This would have a ripple effect across the economy, especially for sectors that rely on e-commerce. And by incentivizing consumers to shop at brick and mortar stores, delivery taxes would make it harder for small, online businesses to compete.

For a growing number of Washingtonians, deliveries are not a luxury – they are a necessity. Statewide polling shows that inflation is one of the biggest concerns in Washington. A delivery tax would hurt the people and businesses who can least afford it.

Adam Kovacevich is founder and CEO of the center-left tech industry coalition Chamber of Progress. Adam has worked at the intersection of tech and politics for 20 years, leading public policy at Google and Lime and serving as a Democratic Hill aide.