Editor’s note: Erin Robinson, Secretary Washington Coin and Bullion Association, provided the following editorial.

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It sounds so simple. Unemployment is up, state revenues are down. The Legislature is looking for new revenue to avoid another round of devastating cuts.

Why not close so called, tax “loopholes?” And why not start by extending the business and occupation (B&O) tax on to the sale of gold and other precious metals? As is so often the case, the reality is more complicated than the perception.

The reality is, re-imposing the B&O tax on the sale of precious metals will devastate small, local dealers, and will severely affect industrial refining and recycling businesses in our state. This tax increase will cost our state jobs and tax revenue.

In 1984, the state Department of Revenue looked at the affect our tax system had on the precious metals industry, and determined that the vast majority of purchases were being made out of state, to avoid our taxes. The next year, the Legislature exempted the sale of precious metals from the sales and B&O tax. Lawmakers took this action to create jobs in Washington State – and it worked. Prior to 1985 there was virtually no investment coin and bullion industry in Washington. Today, there are more than 100 stores employing over 300 people.

Now the Legislature is considering proposals to go backwards and re-impose the B&O tax. The affect on investment coin and bullion dealers would be obvious, and devastating. The vast majority of states do not collect sales tax on these investments, and our B&O tax, which is a tax on gross receipts, not net profits, is especially onerous on businesses with limited ability to “mark up” the price of their product. Without this exemption, dealers will either have to raise prices, or see their profit margin wiped out. If they raise prices, investors will once again buy out of state, stores will close, and the state will lose more jobs and more revenue.

Likewise, this new tax would also hurt refiners and recyclers of precious metals who serve the photo finishing and electronics industry. They work on narrow profit margins in order to compete for large national accounts, and if they tried to raise prices their customers will look at their bottom line and will go to another refiner in the U.S. that can offer the same services at a lower price.

Investment coin and bullion dealers, and those in the recycling and refining industry already pay the B&O tax. Refiners pay the B&O tax on recycling/refining services and manufactured equipment; coin and bullion dealers pay the B&O on their commissions, just as stock brokers do.

Adding insult to injury, representatives of national trade associations representing coin and precious metal dealers have informed Seattle business leaders that repeal of these tax exemptions will effectively eliminate Seattle, Spokane, Tacoma and Everett as potential sites for national conventions and coin shows. A number of the larger shows have a documented estimated economic impact ranging from $9 to $15 million per event.

South King County’s lawmakers, Sen. Claudia Kaufman, and Reps. Geoff Simpson and Pat Sullivan, are critical in this debate. Please contact the legislature on their toll free hotline at 1-800-562-6000 and urge your lawmakers to oppose these job killing new taxes.

Perhaps there are tax loopholes that should be closed, but re-imposing taxes on precious metals will make things worse for the state, not better. These exemptions were enacted to create jobs, and they were successful. The last thing we need right now is more people in the unemployment line, and less revenue flowing to our state government.