The case against requiring online retailers to collect state sales taxes gets thinner with each passing year.
Most recently, the decision by Amazon to build warehouses in Hillsborough and Polk counties means the world’s largest online retailer will now be required to collect the 6 percent tax on Florida sales.
That should open the door for legislative action to impose the requirement on all online retailers, even those without any physical operations in the state. Doing so would level the playing field for brick-and-mortar stores, which must charge the sales tax and are at a decided disadvantage when competing with online retailers exempt from collecting the tax.
But don’t hold your breath. Even though hundreds of millions of dollars in revenue could be generated annually for the state, lawmakers seeking re-election may be reluctant to have their names attached to legislation being miscast by its opponents as a tax increase.
Just to be clear, the issue is not about increasing taxes. It’s about fairness, and about capturing revenue that is owed to the state but that goes uncollected because of antiquated laws. Lawmakers should look beyond the politics and pass legislation this year that positions the state to receive the sales taxes.
If lawmakers want to mitigate the tax load on Floridians, they can make the legislation “revenue neutral,” meaning the added revenue from online sales tax collections will be offset by tax cuts in other areas. That solution actually provides an incentive for lawmakers to get this inequity off the books. Of course, that idea was part of a bill that died during the state’s last legislative session.
The sales tax question was part of the negotiations between Gov. Rick Scott and Amazon that ended with the online retailer deciding to locate its giant distribution centers in Ruskin and Lakeland. State and local officials lured Amazon with tax breaks, and the retailer agreed to bring a thousand jobs to the area. Amazon also knew its physical presence in the state would make its Florida sales subject to the 6 percent sales tax.
Under federal law, online retailers without a physical presence in a state are not required to collect the sales taxes and remit them to those states. But there is a congressional effort to change that. The federal Marketplace Fairness Act has passed the U.S. Senate but is stuck in the House, where it faces tea party opposition.
It it were to pass, and if Florida lawmakers pass legislation clarifying its sales tax laws, the state would be poised to bring between $200 million and $800 a year in online sales taxes.
As the Tribune’s James L. Rosica reports, that could be made revenue neutral with another sales tax holiday on school supplies, or from other tax cuts that could save Floridians money.
Online sales are growing at a rapid rate. In North America, they topped $364 billion in 2012. They are expected this year to reach $1.3 trillion worldwide.
With the holiday season around the corner, the state’s retailers can only watch as the out-of-state retailers offer the same merchandise online at lower prices, thanks to outdated state and federal laws.
That’s not fair. Congress, and the Florida Legislature, should put self-interest aside and fix the law.