Delay corporate activity tax for all

The first payment of Oregon’s new Corporate Activity Tax — a 0.57% assessment on most corporations’ activity above $1 million in the state — is due April 30. Now, however, with the novel coronavirus pandemic creating problems for businesses large and small, legislators are talking about delaying collecting the tax, at least for some. It’s the wrong approach. The tax should be put on hold across the board.

The CAT is expected to give Oregon schools some $1 billion in new revenues a year, money that will be spent implementing the Legislature’s Student Success Act, approved in the 2019 legislative session. Schools won’t begin spending the money during the current school year, however.

Lawmakers on the Legislature’s Joint Committee on Coronavirus Response met in Salem on Monday, and among the topics discussed was the idea of delaying collection of the CAT at least for the time being. While members of both parties agreed that some delay makes sense, committee co-chair Sen. Arnie Roblan, D-Coos Bay, and some others favored a split approach, delaying payments for hard-hit businesses but keeping to the current schedule for those apparently doing well, coronavirus or not.

It won’t work. The rules governing the tax are still a work in progress, for one thing, and, thanks to the coronavirus, the Oregon Department of Revenue has canceled update meetings on what’s being done. That makes it tough, to put it mildly, for businesses to comply.

There’s also no assurance the revenue department has the ability to delay payments for some businesses but not for others, or even if it could decide with reasonable certainty which businesses should pay in April and which should not.

Better to do what both state and federal governments have done elsewhere. President Donald Trump announced Monday that enforcement of the Real ID standards, which Oregon has not yet met, will be delayed, though he has not said for how long. And Oregon has decided that, to make social distancing easier, studded tires need not be removed until May 1, a month after the normal March 31 deadline.

Given the problems Oregon businesses are facing now, lawmakers should delay the CAT across the board. Yes, schools need the money, but they don’t need it immediately. A delay would give business a badly needed break and give the state time to get the CAT right the first time.

(1) comment

gsr

So how do you propose to pay for state services? Gov. Brown: “I am gravely concerned about our ability to deliver basic services over the next six months to a year given the drop in revenues".

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