That Amazon package soon could come with a new tax for roads

By Adam Aton | 06/27/2024 06:40 AM EDT

Washington state is looking at a fee on doorstep deliveries. It could help plug a projected drop in gas tax revenue.

A worker handles a carton at an Amazon same-day delivery shipping center in Woodland Park, N.J.

A worker handles a carton at an Amazon same-day delivery shipping center in Woodland Park, New Jersey. Ted Shaffrey/AP Photo

Washington state is mulling a new way to pay for roads in the race of eroding gas tax revenues — a fee on doorstep deliveries.

The home state of Amazon is considering whether to follow Colorado and Minnesota by imposing a “retail delivery fee” on items delivered by e-commerce companies, as well as traditional stores.

Like most states, Washington primarily funds transportation projects through a gasoline tax. Its levy is 49 cents per gallon — one of the highest in the country — but the purchasing power of that revenue is plateauing as cars become more fuel efficient and, increasingly, electric.


By 2035 — when Washington will require all new vehicles to be zero-emissions — a state panel estimates gas tax revenues will fall below $1 billion, a decline of more than $300 million from last year.

Meanwhile, transportation planners say infrastructure upkeep is growing costlier as vehicles get heavier — a trend driven by the rise of EVs as well as more delivery vehicles.

That’s sent policymakers searching for new ways to finance roads and bridges.

“I think 10 or 15 years ago, the legislature might have said, ‘Well, instead of making up this new mechanism, let’s just add an additional penny to the gas tax,’” said state Sen. Marko Liias, the Democrat who chairs the Senate’s transportation committee.

“That once very reliable transportation funding tool is no longer reliable in the long term,” he said. Lawmakers are not considering a delivery fee solely due to EVs’ impact on the gas tax, he added. “But it is part of being in this moment when these trends are converging.”

Nationwide, Washington last year saw the greatest increase in EV market share of any state, according to the Alliance for Automotive Innovation, with EVs and plug-in hybrids accounting for more than 1 in 5 vehicles delivered to dealerships.

Washington’s local governments this year funded a study of how a retail delivery fee might work in the state. That analysis, prepared by the engineering firm CDM Smith, was presented last week to lawmakers who are considering whether to introduce a retail delivery fee in next year’s legislative session.

A fee of 30 cent per in-state delivery would generate for Washington between $45 million and $112 million in 2026, the firm found, and by the end of the decade it would rise to between $59 million and $160 million.

That’s in line with Colorado’s experience, the firm wrote, where a 27-cent fee per order raised $78 million over its first year. (The fee, indexed to inflation, is now 28 cents.) Minnesota is scheduled to phase in its 50-cent fee in July.

Washington lawmakers expect a rocky road ahead for any potential retail delivery fee, which still hasn’t been formally proposed in the Legislature. Business groups already are rallying against the idea, which they call a “trip fee.”

“It definitely feels like it’s a mix of businesses here that have legitimate concerns,” Liias said. “But it also feels like there’s overtones of a national movement to try and stop this from becoming a more prevalent trend.”

The Washington Retail Federation argues a fee would land hardest on the poorest customers and the smallest businesses.

“It’s a very regressive proposal,” said Mark Johnson, the federation’s senior vice president of policy and government affairs. Larger retailers, meanwhile, would face the prospect of a patchwork of delivery fees that changes state by state.

“Our members have consistently told us that if you are going to impose something of this nature, that you do it on a federal level,” he said. “It’s a nightmare for compliance.”

The retail federation is still discussing the idea with its members and won’t take an official position on it until it becomes formal legislation, Johnson said. But he encouraged lawmakers to examine other ideas for transportation funding, such as vehicle sales taxes.

Washington already has taken one notable step on transportation funding: It is one of only two states in the country with an economywide cap-and-invest system.

In total, the climate law provided $324 million for the state’s most recent two-year, $13.6 billion transportation budget, according to the Washington Standard. Most of that money went to ferries and other mass transit projects, but policymakers say that gave them breathing room to direct other funding to roads and bridges.

But Washington’s cap-and-invest program could go away after this year. A ballot initiative in November will ask voters if they want to repeal the system, which opponents have blamed for higher gas prices. If it’s repealed, lawmakers will be looking even more closely at new revenue sources like a retail delivery fee.

As more states examine the policy, the debate takes on increasingly national implications — which shrinks the room for compromise, Liias said.

“If the purpose is to stop a multi-state trend on this, then there’s nothing you can really do to mitigate that,” the transportation committee chair said.

Local businesses might be interested in haggling over the details, such as making it easier for them to comply, he said. “But if you’re talking to the national organizations, they don’t care about any of that. They’re just like: no, no, no.”