Committee hears technical fixes and industry concerns in House Bill 2711, including luxury tax changes and Preserve Washington account

Committee staff and industry representatives presented and debated technical changes and program timing in proposed substitute House Bill 2711 during a Feb. 23 public hearing before the House Transportation Committee.

Mark Mattson, committee staff, told the committee that HB 2711 responds to administrative concerns raised by the Departments of Revenue and Licensing and the State Treasurer’s Office following last year’s transportation resources bill (engrossed substitute Senate Bill 5801). Mattson summarized the prior enactments: last year’s bill raised the motor fuel tax by 6 cents and special fuel by 9 cents, with an additional 3‑cent special fuel increase slated for July 1, 2027, and added inflationary annual adjustments to the fuel rates. He said new sales and use taxes enacted in 2025 on certain luxury vehicles (noncommercial motor vehicles priced above a $100,000 deduction), luxury aircraft, and recreational vessels required clarifications related to trade‑in treatment in the use tax base.

Mattson described the substitute’s principal changes: it repeals the luxury aircraft tax, aligns the use tax base with the sales tax base so trade‑in value is treated consistently, delays the registered tow‑truck operator reimbursement program (RTTO) to July 1, 2027 because no appropriation was included this biennium, and establishes a Preserve Washington account in the Motor Vehicle Fund dedicated to highway preservation and maintenance. The substitute also clarifies peer‑to‑peer rental‑platform administration of the rental car tax by requiring vehicle owners to certify reseller status so platforms can notify rental car companies to collect tax when appropriate, waives penalties and interest for dealer compliance efforts that predated Revenue Department guidance, and allows luxury vehicle taxes on leases to be paid incrementally with lease payments.

Public testimony focused on the luxury tax’s potential market impacts. Kevin Carl, an RV dealer, said RV registrations have fallen about 52% and asked the committee to delay the luxury tax implementation for one year to avoid pushing customers to buy out of state. Charlie Power of RV Country echoed that request and said the change would make Washington among the highest taxed states for motorhomes; he and other dealers asked legislators to adopt a one‑year delay and work with dealers on a less disruptive approach. Labor and municipal representatives supported the Preserve Washington account and the broader emphasis on preservation and maintenance.

Committee staff said the proposed substitute will be posted to the committee materials site (and staff will ensure public availability) and noted an executive session scheduled for Wednesday during which members may offer amendments; amendment requests must be submitted to staff by 10 a.m. the next day and finalized by 6 p.m. No committee vote on HB 2711 was recorded on Feb. 23.