By Linda Bentley | AUGUST 26, 2015
Seattle under fire for illegal gun and ammo tax
“The … ordinance is nothing but a ‘poll tax’ on the Second Amendment and an effort to drive Seattle’s firearms retailers out of business”
SEATTLE – On Monday, the Second Amendment Foundation (SAF), National Rifle Association (NRA), National Shooting Sports Foundation (NSSF), Outdoor Emporium, Precise Shooter LLC and two private citizens filed a complaint in King County, Wash. Superior Court seeking declaratory and injunctive relief against the city of Seattle.
This action marks the first time the SAF, NRA and NSSF have collaborated on a lawsuit.
On Aug. 10, the Seattle City Council voted unanimously to pass Council Bill 118437, “an ordinance related to imposing a tax on engaging in the business of making retail sales of firearms and ammunition,” which was modeled after a similar measure passed in Cook County, Ill.
On Aug. 21, Mayor Ed Murray approved and signed the ordinance, which makes it effective Sept. 20, 2015.
The tax will be imposed, beginning Jan. 1, 2016, on every person engaging in business of making sales of firearms or ammunition within the city.
The tax rates to be imposed on retail sales is $25 per firearm, $0.02 per round of ammunition that contains a single projectile that measures .22 caliber or less and $0.05 per round for all other ammunition.
The ordinance also amended the Seattle Municipal Code making failure to pay the firearm and ammunition tax a gross misdemeanor, punishable by a fine of up to $5,000, imprisonment for a term not to exceed 364 days, or both.
The complaint, filed by Attorney Steven W. Fogg of Corr Cronin Michelson Baumgardner Fogg & Moore LLP, calls the ordinance a “piece of propaganda” passed to make firearms and ammunition more difficult to access, despite the ordinance’s mandates being legally unenforceable.
SAF founder and Executive Vice President Alan Gottlieb stated, “We’ve been down this path before with Seattle when we sued them and won, knocking out their attempt to ban guns in city park facilities. The city does not seem to understand that no matter how they wrap this package, it’s still a gun control law and it violates Washington’s long-standing preemption statute.” RCW 9.41.290 (Preemption Clause)
Washington statute specifically states: “The state of Washington hereby fully occupies and preempts the entire field of firearms regulation within the boundaries of the state, including the registration, licensing, possession, purchase, sale, acquisition, transfer, discharge, and transportation of firearms, or any other element relating to firearms or parts thereof, including ammunition and reloader components. Cities, towns, and counties or other municipalities may enact only those laws and ordinances relating to firearms that are specifically authorized by state law, as in RCW 9.41.300, and are consistent with this chapter.”
RCW 9.41.300 permits municipal subdivisions to enact laws and ordinances restricting the discharge of firearms in certain locations and restricting the possession of firearms in a municipality-owned stadium or convention center, inapplicable to case at hand.
Despite the authority to regulate firearms resting exclusively with the state of Washington, the Seattle City Council attempted to avoid the Preemption Clause by stating RCW 9.41.290 is not implicated because taxation and regulation are legally distinct functions.
The complaint states, “Beyond having no legal basis, the fanciful notion that a tax can exist without implicating or requiring regulation quickly collapses when one considers the context surrounding passage of the ordinance.”
It points out statements made by council members in support of the ordinance indicated their desire was to suppress the sale of firearms and ammunition.
Councilman John Okamoto read the following citizen’s statement: “Prohibiting guns completely will not stop every shooting, but I do believe that making it more difficult to access guns and ammunition will save more lives”
Also showing support were Councilman Bruce Harrell, who stated, “The fact is, in simple terms, access to guns is too high,” and Councilwoman Sally Bagshaw, who stated “We cannot rely upon our federal government to do what’s right here.”
The complaint calls the city’s estimates of how much revenue the tax would raise “wildly erroneous” and states it is based on “inaccurate assumptions on the price of firearms and ammunition, the number of sales taking place in Seattle, and the firearms businesses that would be able to continue operating in Seattle after imposition of the tax.”
And, while the anticipated funds supposedly earmarked for gun violence education and research will not be realized, Seattle’s tax will have exactly the regulatory effect intended by council when they passed the tax: a dramatic reduction in the number of firearm and ammunition sales that will take place within the Seattle city limits.
According to the complaint, if the tax becomes effective, plaintiffs will be forced to purchase firearms and ammunition outside Seattle, either because it is economically infeasible to purchase in Seattle or because those selling firearms and ammunition will be forced to relocate.
If Precise Shooter were to apply the tax to its sales to date in 2015, it would owe more for the increased tax than it has earned in profit. And passing the tax on to the customer would result in a catastrophic loss of business for Precise Shooter.
The most popular rounds of ammunition at Precise Shooter, the .22 caliber, costs $0.05 to $0.10 per round. The next most popular ammunition, the 9mm, costs approximately $0.20 to $0.30 per round.
A $0.02 and $0.05 respective tax per round results in a 20 to 40 percent increase, an increase that would certainly send customers to online retailers or those just outside Seattle.
Because the tax would make the sales of firearms and ammunition unprofitable in Seattle, Precise Shooter would need to relocate outside the city limits.
Even though the tax doesn’t go into effect until January, Precise Shooter must make decisions now about relocating outside Seattle in order to continue doing business after that date.
Outdoor Emporium faces similar harm.
To ensure customer satisfaction and maintain its position as the largest firearm retailer in Seattle, Outdoor Emporium has historically matched any advertised price on firearms and ammunition and, as a result, its profit margin is significantly low.
The imposition of a firearm and ammunition tax will erase that thin margin if not passed on to customers or will drive customers outside the city limits.
According to Outdoor Emporium, approximately 70 percent of its firearms customers are non-Seattle residents.
The tax will also affect Outdoor Emporium’s wholesale business because it will no longer be able to provide the lowest price on ammunition to local retailers.
If the tax goes into effect Jan. 1, Outdoor Emporium will be forced to either relocate outside of Seattle; cut its firearm and ammunition department entirely, causing a number of layoffs; or refrain from selling all but the most expensive and highly-specialized firearms and ammunition.
Any of the options will serve only to damage Outdoor Emporium’s brand as a location for a wide array of sporting goods and damage its customer base.
If these retailers are forced to leave Seattle, purchasing a generic firearm, such as a handgun or rifle, or common ammunition, could become a practical, if not total, impossibility in Seattle.
The complaint requests injunctive relief from any portion of the ordinance being enforced and asserts plaintiffs are entitled to an accelerated judicial declaration that the ordinance violates Washington statutory and constitutional law and is therefore null and void.
It also requests a declaration that defendants lack legal authority to enact any ordinance, law or rule that imposes a tax on the sale of firearms or ammunition, and may not collect the firearm or ammunition tax or enforce the ordinance by any other means.
Chris Cox, executive director of NRA’s Institute for Legislative Action, stated, “Once again, anti-gun activists in Seattle have chosen to violate the Washington State Constitution and trample upon the Second Amendment rights of law-abiding citizens. They tried to enact similar regulations back in 2009 and lost. It’s a shame to see such a waste of public resources on issues the courts have already ruled to be unconstitutional.”
Lawrence G. Keane, NSSF Senior Vice President and General Counsel stated, “The Seattle ordinance is nothing but a ‘poll tax’ on the Second Amendment and an effort to drive Seattle’s firearms retailers out of business.”
