A coalition of Oregon's mainstream business groups is opposing a legislative plan to create a new tax on corporations.

Related: 4 Things To Know As Oregon's Tax And Budget Wars Heat Up

THANKS TO OUR SPONSOR: Become a Sponsor

The business opposition complicates the task of reaching a budget-and-tax deal to close the state's $1.6 billion shortfall.

Related: Subscribe to the "OPB Politics Now" podcast.

Democratic legislative leaders have focused heavily on a proposal to replace Oregon's corporate income tax with a new "corporate activity tax" based on sales. Supporters say it would be simpler while also raising more money for the state.

But Sandra McDonough, president of the Portland Business Alliance, says she believes a tax on corporations' sales in Oregon has become politically toxic.

"Our concern is if that comes out of the Legislature, we're going to have another big fight — another big election fight — and we don't need that," McDonough said. Her coalition also includes Associated Oregon Industries and the Oregon Business Association.

She noted that last year Oregon voters strongly rejected a labor-backed initiative, Measure 97, which would have levied a 2.5 percent tax on sales by large corporations doing business in Oregon. This new proposal by Sen. Mark Hass, D-Beaverton, would have a much lower rate and would apply to many more companies.

But one group — backed by some conservative activists and businesses — has already threatened to take the issue to the ballot if passed by the Legislature.

THANKS TO OUR SPONSOR: Become a Sponsor

Hass, who chairs the Senate Finance and Revenue Committee, said he will continue to work on his proposal.

He said he believes it still has some key business support in Oregon, even if roadblocks exist.

"I'm not going to deny that there is reluctance out there," said Hass, noting that moving from a corporate income tax to a sales tax would create winners and losers in the business community.

Related: Budget Writers Warn 350,000 Oregonians Could Lose Health Coverage

Ben Unger of Our Oregon was a sponsor of the corporate tax ballot measure defeated by voters. His group continues to back higher taxes on corporations, saying they are not paying their fair share.

Unger warned businesses won't be able to get cuts to overhead costs in state government if they don't agree to take on more of the tax burden.

McDonough said her coalition will agree to some tax increases, including on business, if they are accompanied by measures to reduce personnel and other government costs.

Subscribe To 'OPB Politics Now'

Subscribe to the show on NPR One, Apple Podcasts or wherever you find your podcasts. Need to get in touch? Contact us here.

