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Posted on: July 1, 2018

Federal Way and Edgewood Customer Excise Tax (Issue 176)

The Cities of Federal Way and Edgewood have recently adopted ordinances seeking to levy an excise tax on the District’s revenues charged for the provision of water and sewer utility services within the boundaries of the respective cities. The City of Federal Way excise tax rate is 7.75%. The rate for the City of Edgewood tax is 6%. The District is challenging both ordinances in court. 

As "gross receipts" taxes, each tax applies to the revenues received by the District, including the amount charged to pay the excise tax itself. With this compounding, the net impact of the Federal Way tax (i.e. its "effective" rate), will be an 8.4% increase in water and sewer rates. Edgewood residents will see a 6.38% increase in rates.

The Board of Commissioners recently adopted new water and sewer rates for Federal Way and Edgewood customers to implement collection of the taxes. For benefit of the administration of the tax obligation, the amount of the tax is embedded in the rates and will not be shown as a separate amount. If you live in one of these areas, your billing statement will reference the tax and the rate of the tax. To determine the actual cost of the tax, simply multiply the City tax rate times the amount of your water and sewer bill (e.g. the effective rate of the Federal Way tax is 8.4%, so the total for a $100 water and sewer bill is $108.40. The tax portion is $108.40 x 7.75%= $8.40). The tax on Federal Way bills will begin with billings that go out on June 20, 2018. The tax for Edgewood customers will likely start sometime later in July or early August.

Newsletter-July/August 2018 (Issue #176)
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