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Tax bill will be amended before House vote next week

Democrat's plan would eventually replace corporate income taxes with a business activities tax on sales of more than $3 million.

CAPITAL BUREAU - The Oregon House of Representatives will vote  next week on business taxes proposed by House and Senate Democrats.SALEM — A proposed tax on business sales authored by Democrats is going to be amended over the weekend before it is expected to go to the floor of the House of Representatives.

Legislators went over several amendments to the proposal Thursday morning, which is still taking shape, and is expected in the next iteration to include more specificity on a proposal to direct the tax to an education-specific fund, and to include a proposed exemption on agriculture and forestry businesses.

Sen. Mark Hass, D-Beaverton asked staff to draft two versions, one that does, and one that does not include, the exemption for agriculture.

The current proposal increases the corporate income tax temporarily and then institutes a tax on businesses with sales of more than $3 million annually. The rate varies depending on sector, and businesses with more than $150,000 but less than $3 million in annual sales would pay a flat rate of $250. The proposal also includes reductions in the personal income tax.

It is projected to raise more than $500 million per year.

The so-called corporate activities tax is a significant piece of legislation this session, part of an effort to reconcile what some lawmakers have described as the state's volatile tax structure. Lawmakers are scrambling to fill an approximately $1.4 billion gap between expected revenues and expenses in the next two years.

The Joint Committee on Tax Reform is expected to meet again Monday morning. Republicans on the committee Thursday were critical of the tax, which Democrats in the House and Senate have advocated for. The bill will need some Republican support in order to meet the legally required vote threshold for raising new revenue.

The current version of the bill dedicates the money collected by the commercial activities tax, minus a pass-through credit, to an education-specific fund.

Sen. Herman Baertschinger, R-Grants Pass, said the proposed structure creates "winners and losers" depending on the business type.

Hass said 92 percent of Oregon businesses have less than $3 million in annual sales.

The committee also plans to hear from the Department of Revenue next week. The department would be responsible for administering and collecting the new taxes provided for under the legislation. The Department of Revenue has come under criticism from lawmakers this session, including for the fact that the state is owed more than $3 billion in unpaid taxes, fines and fees.