The cost of buying items on Amazon could rise if the Florida Legislature passes a bill that would require out-of-state online retailers to collect sales tax.
For more than a decade, Florida retail leaders have tried unsuccessfully to level the playing field for brick-and-mortar retailers who struggle to compete on price. As this year’s Legislative session opens Tuesday, they believe they have more support.
“There really hasn’t been a year when we’ve had all the entities saying the same thing,” said John Fleming, a spokesman for the Florida Retail Federation. “There’s a recognition that it’s time to do something.”
The stakes have never been higher, as more people look to the Internet to make purchases and comparison shop. Online sales grew 15 percent nationwide last year compared with less than 5 percent for traditional retail sales. Amazon, the largest retailer of online goods, finished 2012 with $61 billion in sales, compared with $5.3 billion a decade ago.
Economists estimate Florida loses $454 million a year in sales tax revenue on goods bought from Internet-only vendors — a number some say could be considerably lower or as high as $1.5 billion. Overall, the state collected more than $17 billion in sales tax during fiscal year 2011-2012.
The state requires retailers that are physically located in Florida, such as Best Buy and Target, to collect sales tax, even if the item is purchased online. Stores without a brick-and-mortar presence don’t have to pay the tax, resulting in a 7.5 percent savings in Monroe County, 7 percent savings to customers in Miami-Dade and 6 percent savings in Broward and Palm Beach counties Florida residents, for instance, don’t pay sales tax on many purchases from Seattle-based Amazon.
“There is a basic fairness issue here,” said Jerry Custin, president and CEO of the Upper Tampa Bay Chamber of Commerce, based in Oldsmar. “It puts the retail guy in your community at a disadvantage. In addition to what they already do to have a brick-and-mortar business, they also have to pay sales tax.”
While lawmakers appear united on the fairness issue, there’s less agreement on how the additional revenue would be spent. The legislation (Senate Bill 316 and House Bill 497) includes a revenue-neutral provision that would mean no new tax money for state government. Rather than count the revenue as money for education, healthcare, roads and other basic needs, the Department of Revenue would track the amount collected from out-of-state online retailers and return the amount to taxpayers.
The bill, which if passed would take effect July 1, stipulates the money would be used to reduce taxes, including giving breaks to manufacturers buying equipment. Florida, which has no personal income tax, relies on sales tax for more than 70 percent of its annual revenue.
Some supporters of the legislation have said the revenue debate, while important, is secondary to resolving the equity issue and collecting what is owed to the state. Florida law requires residents to pay sales tax on purchases made over the Internet, but few do, and there’s no enforcement. Many people aren’t even aware of the rule.
Last year, a Florida Senate committee approved a similar e-commerce bill, but it died in the House. Republican lawmakers committed to not raising taxes said it amounted to a new tax. It also contradicted a 1992 U.S. Supreme Court ruling that a state can’t require remote retailers without a physical presence to collect sales tax in that state.