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Committee adopts multiple targeted amendments but advances broad bill to tax additional services and nicotine products
Summary
Substitute Senate Bill 5,814, which would extend sales tax to select services and broaden nicotine taxation, received a due‑pass recommendation after the committee adopted and rejected multiple amendments addressing hospitals, telehealth, temporary staffing, advertising services, and nicotine product definitions.
The Senate Ways & Means Committee on April 18 voted to advance substitute Senate Bill 5,814, a large bill that would extend retail sales tax to certain services, broaden the tobacco/nicotine tax base and require a one‑time prepayment of sales tax collections for qualifying businesses. Committee staff estimated multibillion‑dollar revenue impacts in the 2025‑27 biennium and over a four‑year outlook.
Committee members considered a sequence of amendments that narrowed the bill’s scope in several places. Senator Mazzall offered amendments to exempt certain information technology consulting, training and support services purchased by hospitals (Amendment 42) and to exclude hospitals from the definition of temporary staffing services (Amendment 43); Amendment 42 failed and Amendment 43 was adopted. Other amendments sought to exempt temporary staffing serving long‑term care facilities (Amendment 44, not adopted), to clarify advertising and live‑presentation definitions (Amendment 46, adopted), and to exclude electronic health records and telehealth platforms from the taxable definition (Amendment 48, not adopted). The committee also adopted clarifications to prevent double taxation within affiliated groups (Amendment 47).
On nicotine products, the committee debated several competing amendments that would define “moist snuff,” add definitions for oral nicotine and nicotine analogs, and impose a per‑unit tax on oral nicotine products. Amendments 51 and 52 (nearly identical, offered by Senators Stanford and Braun) proposed a new per‑unit tax for oral nicotine products; both were discussed and ultimately withdrawn. Other amendments removed a one‑time prepayment requirement (Amendment 53, not adopted).
The bill’s briefers and senators noted sizable fiscal estimates: staff cited an approximately $2.9 billion increase in state revenue in the 2025‑27 biennium and about $4.7 billion over the four‑year outlook, along with several million dollars in Department of Revenue administrative costs. Senators questioned whether a portion of the increase would be effectively a half‑percentage point rise in the state sales tax base and how local governments would be affected.
Committee outcome: After multiple roll calls on individual amendments and several voice votes, the committee rolled adopted amendments into a substitute and recommended substitute Senate Bill 5,814 for a due‑pass recommendation to the rules committee.
Why it matters: The bill would materially broaden retail sales tax to new services and nicotine products, changing the B&O tax classifications for some providers and potentially shifting tax incidence to consumers and local governments.
What happens next: The substitute goes to the rules committee; senators indicated additional technical and budget work will be required as the bill advances.
