2 sticker shocks: Oregon 3% surcharge, plus retail delivery fee

By Taxpayers Association of Oregon
OregonWatchdog.com

As seen above, our office witnessed another sign of local businesses putting up notices warning customers that a 3% surcharge is placed on all transactions.   This is the result of the Corporate Activities Tax.

Also this week, we saw the news from Willamette Week that Oregon lawmakers are considering a retail delivery fee.  This fee would hit those delivery services (Amazon, GrubHub, Walmart, UberEats).  The money raised byteh delivery fee would be used to bailout the Oregon Department of Transportation’s billion dollar hole.  This hole is caused by; massive overspending by ODOT, cost overruns, inflation, and Oregon’s out-of-control government pension (PERS) system which is over $20 billion in debt.

The sign on the 3% surcharge read, “There will be a 3% additional surcharge added to all transactions to cover the cost of the Corporate Activities Tax for Oregon businesses.  Oregon state collects the tax for the “Fund for Student Success” and will be used for education.”

This 2019 passed Corporate Activities Tax is a tax on revenue not profits (like most taxes in America).  So, if a company sells a $97 product for $100, the CAT Tax will come in and tax .57% of revenue which for some shops adds up to another 3% in higher costs, making the entire sale unprofitable.   Remember, some businesses like restaurants and grocery stores operate under a 5% profit margin.   A 3% in added costs is devastating to them.   This is why some businesses have to create a surcharge like the one we see above in order to not drive customers away.

Notice that the sign says “for Oregon businesses”.   Sales to customers outside Oregon are exempt under the CAT Tax.   This is why large companies like NIKE or Intel which have sales mostly outside Oregon do not pay the CAT tax (on outside Oregon revenue).

There is question on whether this surcharge on the bill is allowable under Oregon law.  Liberals who passed the tax did not want companies to separate out the tax on receipts.     It has been a source of legal action and lobbying since 2019.  This is one reason why you have not seen more examples of this surcharge on your bills.

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