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HB 2199

Creating business and occupation and public utility tax exemptions for certain amounts received as the result of receipt, generation, purchase, sale, transfer, or retirement of allowances, offset credits, or price ceiling units under the climate commitment act.

2023-2024 Regular Session Introduced by Beth Doglio and 4 co-sponsors

Washington exempts carbon allowance and offset credit transactions from business and occupation and utility taxes, reducing compliance costs for climate market participants starting April 2024.

Effective date 4/1/2024.
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Bill Summary · HB 2199

Legislative bill overview

HB 2199 exempts certain carbon market transactions from Washington State's business and occupation (B&O) and public utility taxes. Specifically, it excludes revenue generated from trading climate commitment act allowances, offset credits, and price ceiling units from these tax obligations, effective April 1, 2024.

Why is this important

Washington's Climate Commitment Act (CCA) creates a cap-and-trade system where entities buy and sell carbon allowances. By exempting these transactions from B&O and utility taxes, the bill reduces the tax burden on carbon market participants and potentially lowers compliance costs for businesses operating under the CCA. This could affect state revenue and influence the economic behavior of entities participating in the carbon market.

Potential points of contention

  • Revenue impact: Exempting these transactions reduces state tax revenue, which must be offset through other means or could affect funding for state services
  • Market fairness: Some may argue the exemption creates an unfair advantage for carbon market participants compared to other businesses paying full B&O taxes
  • CCA effectiveness: Critics could contend that reducing the cost of carbon trading undermines the economic incentive structure that makes cap-and-trade systems effective at reducing emissions

Compiled from official sources — confirm details with the bill’s official record.

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