2013 April/May Advocacy Report

“United We Stand!”

NAIFA Washington ACTION ALERT helps defeat 271% B&O Tax Increase

The House Finance Committee convened to take action on HB2038—the bill that would impose over $1 billion in various tax increases that was heard in committee on Friday, April 19.   But Olympia’s House of Representatives heard from thousands of insurance producers!!

Summary of our Talking Points to oppose HB2038:

• Section 201 of HB 2038 would increase B&O taxes on insurance agents and brokers by 271%.
• This tax increase would damage thousands of small business insurance professionals on Main Street in every city and town in Washington.
• Insurance Agents and Brokers have no ability to include tax increases on premium statements that insurers send to their policyholders.
• Washington’s budget problems reflect a struggling economy that is still recovering. Insurance Agents and Brokers are small businesses that are also still recovering, along with their customers. Now is not the time to add a massive tax increase on these small businesses.
• This massive tax increase on Agents and Brokers unfairly cripples independent agents and creates a competitive advantage in the insurance market for insurers that have direct distribution channels and do not use agents to sell or service insurance policies.
• HB 2038 is inconsistent with the Recommendations of the Citizen Commission for Performance Measurement of Tax Preferences and the Final JLARC Report. These Recommendations Call for the Legislature to “review and clarify the …tax rate for insurance commissions…” There has been no review or request for clarification. Without any review or clarification, HB 2038 simply repeals the longstanding tax treatment of insurance professionals, and the result is a massive tax increase.

Here’s a huge “Thank you!” to EVERYONE that called or emailed their Representatives and to everyone that reached out to other producers/agents/friends that were NOT NAIFA members during our recent ACTION ALERT.    A 271% B&O Tax Increase was removed from the House of Representatives Budget Bill HB2038.  Mel Sorensen, NAIFA WA Lobbyist, brought together NAIFA WA, Washington Association of Health Underwriters, Professional Insurance Agents, Independent Insurance Agents/Brokers of Washington and Farmers to testify before the House Finance Committee in Olympia on April 19th.  NAIFA WA was represented by Jeff Kyle, NAIFA President and me, Advocacy/Legislative Chair. 

To hear everyone’s testimony, click on the links below:

• Video 1 of House Finance Committee Testimony from NAIFA WA members
• Video 2 of House Finance Committee Testimony from Insurance Producer Associations
• Video 3 of House Finance Committee testimony from Farmers

From Mel Sorensen, NAIFA WA Lobbyist:
“Congratulations to NAIFA and that balance of the agent/broker community for a terrific preliminary victory!  It is a testament to the power of grassroots involvement.  We will remain fully engaged to ensure that this issue does not reappear during the remainder of the 2013 Regular Legislative Session or in any Special Session that may be necessary before a final budget deal is reached.  So far, so good.
Congratulations on a job well done…for now!”

For clarification on the House vote, Mel had this to say:

“I thought that I’d provide a bit of context for those who are trying to figure out how to evaluate a vote record of the House Finance Committee’s actions on HB 2038.  It's a more complicated vote record than simply looking at the final vote...here's why.  The agent/broker B&O tax increase was included in the bill as it was originally introduced and considered at hearing.  That increase was only one of many increases included in the bill, adversely impacting many different professions and businesses.  When the bill was brought up for Executive action, the Chair released a proposed striking amendment to the original bill (replacing the entire bill with a new proposal). 

The Chair's striking amendment removed the tax increase on agents and brokers.  It also removed the proposed tax increases on stevedoring, janitorial services, and beer.  The striking amendment, however, retained nearly $1 billion in proposed tax increases on other businesses and professions.  During Executive action, Republicans offered a series of amendments to the proposed striking amendment--each amendment was intended to remove a specific tax increase from the striker.  All of those amendments were opposed by the Committee Chair, and all were defeated.  There was never a vote taken exclusively on the removal of the agent/broker tax increase because it was already rolled into the Chair's proposed striking amendment...which also included the very objectionable tax increases on other businesses and professions.  Thus, the final vote count was supported by the Chair and committee Democrats who supported the overall tax package, and it was opposed by Republicans who opposed the tax increases.

Those who voted in favor of the substitute bill on final passage in Committee included the following members:  Carlyle (D, 36^th District), Tharinger (D, 24^th District), Fitzgibbon (D, 34^th District), Hansen (D, 23^rd District , Lytton (D, 40^th District), Pollet (D, 46^th District), Reykdal (D, 22^nd, District), and Springer (D, 45^th District).

Those who voted against the substitute bill on final passage in Committee included the following members:  Nealey (R, 16^th District), Orcutt (R, 20^th District), Condotta (R, 12^th District), Vick (R, 18^th District), and Wilcox (R, 2^nd District).“

YOU are the important factor in all things NAIFA!  By working with other producer groups, our voice was magnified and thus heard.  YOU say we’re about Advocacy…YES!!  But Olympia is NOT done and Mel will remain ‘on guard’ for NAIFA!

“Never Doubt that a Small Group of Thoughtful Citizens can
Change the World.   Indeed, it is the only thing that ever has.” 
~Margaret Mead

Sharon L. Sparling
Advocacy/Legislative Chair
(360) 708-3210