The fee, which many retailers and online purchases levy on delivery, could help free up millions of dollars a year for road maintenance in Washington cities and counties.
State lawmakers must decide whether the option is worth pursuing as they and local leaders struggle with rising transportation maintenance costs and declining gas tax revenue, the main source of funding for road construction.
“Clearly, our cities, counties and states have transportation issues with potholes and overcrowding,” said Sen. Marco Lias, D-Edmonds, after a Tuesday meeting of the bipartisan Joint House and Senate Transportation Committee, which he chairs.
“This is one of many things we're looking at to raise the funds to make the investments we need,” said Lias, who also chairs the Senate Transportation Committee.
Member of Parliament Hear details about the city-funded analysis The benefits and challenges of imposing a fee on the delivery of taxable retail goods by car. A “retail delivery fee” could be applied to packages delivered by Amazon and consumer goods delivered by carriers such as UPS.
The report, prepared by consulting and engineering firm CDM Smith, delves into the potential impacts on consumers and businesses, estimates how much revenue would be generated under different scenarios, and also examines what's happening in Colorado and Minnesota, the only two states that impose retail delivery fees.
The study is not intended to propose policy, but simply provide basic information for lawmakers, said Andrew MacLean of CDM Smith, which published the findings.
As studies have shown, it's a very simple process: Consumers buy retail goods online and have them delivered to their cars. The retailer takes a fee as part of the purchase price and passes it on to the state. Lawmakers have the discretion to decide how to spend that money.
Colorado enacted the fee in 2022, charging 28 cents on each delivery, regardless of the amount. McLean said the fee generated $75.9 million in the first year for local and state uses and clean transportation priorities. Businesses with sales of less than $500,000 are exempt.
Minnesota will enact the fee in 2023, with the tax taking effect this July. The state will charge 50 cents only on deliveries over $100, which could raise an estimated $59 million in revenue for municipalities. The state will exempt businesses with annual sales of less than $1 million.
In Washington's case, consultants have devised methods to assess the potential revenue from fees ranging from 25 cents to 75 cents. On Tuesday, MacLean unveiled four methodologies that assume a 30-cent fee and a steady increase in e-commerce spending, which has been rising in recent years.
If the tax was levied on all orders of taxable items and there were no exemptions for retailers, it could generate $112 million in revenue in 2026 and as much as $160 million by 2030. If the fee was only levied on deliveries of purchases over $75 and retailers with less than $1 million in sales were exempt, potential revenue would fall to $49 million in 2026 and $70 million in 2030.
Lawmakers raised questions about administration and collection of the fees, and made it clear they did not want to impose fees on the delivery of non-taxable items such as food and medicine.
Rep. Jim Walsh, a Republican from Aberdeen, expressed concern that the bill would disproportionately affect low-income residents.
“I'm concerned that this falls into the category of being regressive,” he said. “Is the study looking at ways to mitigate this regressive nature, which in many ways acts like a consumption tax?”
MacLean said that wasn't part of the analysis.
A coalition of opponents, including the Washington Business Association and the Washington Retail Association, cited the issue in their comments. It is included as an appendix to the report.
“The doorstep tax is a double tax on top of the most regressive and highest sales tax in the country,” they wrote. “We recognize that addressing environmental and budgetary challenges requires innovative solutions, but taxing deliveries is not the answer.”
Lias said it's “too early to tell” whether the idea would be pursued in the 2025 legislative session.
“This is the start of a conversation,” he said Tuesday. “It's not a done deal yet.”
