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Overview: REET, cannabis, vapor, tobacco and alcohol taxes and where the revenue goes
Summary
Committee staff summarized the state's selective consumption taxes — including the graduated real estate excise tax, cannabis excise tax distributions, vapor product tax, cigarette and other tobacco taxes, and alcohol taxes — and highlighted volatility and earmarks for those revenues.
Alia Kennedy summarized a group of selective consumption taxes for the committee, emphasizing revenue magnitude, distribution rules and volatility.
Real estate excise tax (REET): Kennedy said Washington moved from a flat REET rate to a graduated structure in 2020. She explained the graduated tiers and gave an example: a $1,000,000 sale would be taxed at 1.1% on the first $525,000 and at higher tier rates above that amount. Staff said REET is the state’s fourth largest tax revenue source and estimated it would generate about $2.5 billion in the current biennium. Kennedy emphasized REET’s volatility, noting the large swings around the 2007 peak and the subsequent decline, and later…
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