It’s time state lawmakers remedy sales tax inequity
There is no disputing that the Internet is becoming a center of commerce. Over the past 12 months, according to the U.S. Census Bureau, e-commerce sales exceeded $216 billion. But unlike transactions at typical brick-and-mortar stores, state sales taxes were not always collected on those online sales. That’s because states have been unable to overcome federal laws and other complications that make it difficult to get out-of-state online retailers to remit the sales tax. In Florida, lawmakers have refused to require online retailers to pay the 6 percent sales tax it requires of retailers with a physical presence in the state. That creates an uneven playing field, harming local merchants, and deprives the state of hundreds of millions of dollars in revenue. We think the time is right to end that inequity.A measure moving through the state Legislature would require out-of-state online retailers to collect the sales tax on purchases made by Florida customers and remit the tax to the state. At the same time, federal legislation is moving through Congress that would allow states to force online retailers to collect sales taxes. If adopted, the federal legislation, known at the Marketplace Fairness Act, would remove a huge legal impediment to states pursuing sales taxes from businesses that are not physically located in their states. To protect small online operators, it would exempt businesses with less than $1 million in annual sales. The federal measure is supported by a healthy majority in the Senate but has an uncertain fate in the House. Even if the federal legislation fails, the state needs to put itself on a path toward collecting sales tax on Internet sales. It can start by adopting the state Senate’s online sales tax measure, SB 316. Although the federal courts have sided with online retailers that have challenged the states, those rulings haven’t stopped a number of states from cutting deals with large online retailers, deals that have resulted in tax revenues being remitted to those states. By passing SB 316, the state can be in position to either cut a deal with online retailers, or to collect the sales taxes if the federal Marketplace Fairness Act were to pass. The potential revenue is nothing to sneeze at. Studies show the state misses out on anywhere from $200 million to $800 million a year in uncollected sales taxes because out-of-state online retailers are not required to collect the taxes. It’s also unfair to brick-and-mortal retailers, the backbone of our local economies and true job creators. Shoppers can price a product at one of their stores and know there is a pretty good bet it can be purchased online, without the sales tax. Lawmakers concerned that support for the measure is tantamount to supporting a new tax can take solace in a provision in the bill that offsets the projected online sales tax revenues with a corresponding decrease in a tax assessed on telephone service and cable and satellite TV. It also mandates a three-day sales tax holiday be implemented. Although those offsetting measures undercut the state’s overall revenues, it is a reasonable way to address lawmakers’ concerns and ensure the focus is on tax fairness. Online retailers complain it is burdensome to calculate how much should be collected on any given purchase, considering each state has its own tax rates and exemptions and that local governments can also lay claim to a piece of the sales tax pie. This is a hurdle, but one that can be overcome in the computer age. In fact, the federal legislation being proposed would require states to provide online retailers with software that can calculate the tax. Too much is at stake for states such as Florida to continue to sit on the sidelines while Internet commerce continues to grow. It’s time for the Florida Legislature, and for Congress, to force online retailers to do the math.