Boeing of Kent pays the city’s business and occupation (B&O) tax except for a waiver for its research and development work for the federal government.
Kent City Council President Dana Ralph said the waiver might be the reason several readers recently contacted the Kent Reporter to claim Boeing doesn’t pay the B&O tax.
“Boeing does pay the B&O,” Ralph said during a phone interview. “They have a waiver for the research and development but are not totally exempt. That is not everything they do.”
When the council adopted the B&O tax in 2012 on gross receipts of businesses, it granted a Boeing request to exempt research and development under federal contracts that it performs at the Kent plant, according to a October 2012 Kent Reporter article. The council had a brief discussion at a 2012 workshop about the $2.8 million Boeing exemption and agreed to it because of the federal government connection and the fact it would cost the city only about $1,400 in revenue per year.
The Kent City Code includes the following exemption for the B&O tax that covers the Boeing waiver:
“Research and development under federal contracts. This chapter shall not apply to amounts received for research and development activities performed on behalf of, under contract to, or in partnership with the United States government. For purposes of this section, research and development activities means activities performed to discover technological information, and technical and non-routine activities concerned with translating technological information into new or improved products, processes, techniques, formulas, inventions, or software, the application of which is intended to be useful in the development of a new or improved federal project or component thereof.”
City of Kent Finance Director Aaron BeMiller said in an email last week to the Kent Reporter that he couldn’t tell the newspaper whether Boeing pays the B&O tax or not because city code only allows that information to go to elected city officials and staff except for a few limited exceptions and the Kent Reporter isn’t one of those exceptions.
Because of the denial by BeMiller, the Kent Reporter has filed a public disclosure request for city B&O tax records about Boeing. City staff is working on that request.
When Boeing officials were asked by a reporter whether the company pays the city of Kent B&O tax and whether it has any waivers, spokeswoman Kimberlee Beers sent the following email response:
“Boeing is a proud member of Kent’s business community and we pay all applicable taxes in the city of Kent,” she said, declining to specifically address the research and development waiver. “As a matter of policy, we do not discuss individual taxes.”
When the council adopted the B&O tax it approved other business exemptions, including nonprofit groups, health maintenance organizations, public utilities (already subject to utility tax) and farmers/agriculture (which includes dairies and nurseries). A couple of council members said the exemption for farmers helps encourage local growers to keep producing crops.
The city’s B&O tax brought in $5.2 million in 2013 to help pay for street repairs. Mayor Suzette Cooke has proposed an increase in the tax starting next year to help pay for general government services and pay off city debt.
The council will decide over the next month or so whether to go along with that proposed increase or come up with its own plan. The Kent Chamber of Commerce has come out against the increase.
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