On February 22, the Washington State Legislature Senate Committee on Ways & Means held a public hearing on SB 5967, which was recently amended. If enacted, the proposed amendment would create a new B&O tax surcharge on a new class of “specified financial institutions” and amend the current B&O tax surcharge (enacted in 2019) on such taxpayers.

Specifically, the amended bill would create the Climate Resiliency and Mitigation Surcharge that would be imposed at 0.5% on a “specified financial institutions that are bankers of fossil fuels,” which is a specified financial institution (as defined under current law) that is listed in “the Washington fossil fuel financing report as receiving league table credit financing one or more fossil fuel companies in excess of” $1 billion. The new surcharge would be effective starting in 2023.

The amended bill would also change the current B&O tax surcharge on specified financial institutions starting in 2023.  It would create a three tier system for taxpayer’s subject to the Climate Resiliency and Mitigation Surcharge, which looks at the taxpayer’s adjusted fossil fuel financing as a percentage of the taxpayer’s total financing. In an effort to make this proposal revenue neutral the rates for current surcharge would be decreased from 1.2% to 0.7%, 0.65% and 0.6% depending on the tier for those taxpayers.

The Committee did not take action on the bill following the public hearing. Eversheds Sutherland will continue to monitor this bill’s progression and provide further updates if it advances further.