WASHINGTON STATE TAX STRUCTURE
The state of Washington imposes a B&O tax,^ state assessed property taxes, and substantially
relies on sales and use taxes for its revenues. Of the approximate $13.9 billion in taxes collected
for fiscal year 2005, the two taxes contributing most to revenues were sales and use taxes (59
percent) and the B&O tax (21 percent). Of particular interest to the Washington Department of
Revenue (DOR) is the use tax because it has the highest noncompliance rate (19.5 percent) among
its major taxes, and this noncompliance amounts to an estimated yearly revenue loss of over $56
million (Department of Revenue 2006, 2). This high level of noncompliance (17 percentage points
greater than any other tax) may be due to its lack of visibility. Further, the use tax is one of the
most costly to enforce.