After a decade of striking out in the Florida Legislature, in-state retailers think they might have a real shot at convincing lawmakers this year to approve a bill requiring out-of-state online retailers to collect sales taxes. This would seem to be a no-brainer for such a pro-business Legislature, but ideological and legal hurdles stand in the way.
The GOP’s tired “this-is-a-new-tax” mantra is one hurdle. The other is 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. With the explosion of the Internet since that now-outdated ruling, states are pushing Congress to clear the way. The fact is, laws already require online purchasers in states with sales taxes, including Florida, to pay them, but there is no enforcement, and many buyers aren’t even aware of the requirement.
Still,somebody has to figure out this quandary, and it might as well be the Sunshine State.
Each year Florida loses an estimated $454 million in additional tax revenue by not taxing Internet sales. And that lost revenue promises to increase annually as more and more shoppers use their keyboards to purchase consumer goods.
Internet sales grew 15 percent nationwide in 2012. Compare that to a paltry 5-percent increase in traditional retail sales last year. Florida’s retailers — big box stores and mom-and-pops alike — are losing this battle, and all they are asking for is a level playing field so they can better compete with online behemoths like Amazon, which clocked $61 billion in sales in 2012.
Florida law already requires big brands like Target and Best Buy with stores located in the state to collect sales tax from their online customers, so it’s not as if a precedent hasn’t already been established. It’s just that the Supreme Court ruling, spotty rules and lack of enforcement make this issue more confusing than it should be.
Yet with the housing market improving and the jobless rate in the state looking up, now would be a good time to expand the sales tax to Internet buyers. But first and foremost is the fairness issue, say the state’s retailers.
The lack of an Internet sales tax “puts the retail guy in your community at a disadvantage,” says Jerry Custin, president and CEO of the Upper Tampa Bay Chamber of Commerce. “In addition to what they already do to have a brick-and-mortar business, they also have to pay sales tax.” Exactly.
Lawmakers appear willing to see the logic of the fairness issue, but after that it gets complicated. The proposed legislation to enact online sales taxes, Senate Bill 316 and House Bill 497, both include revenue-neutral provisions that would mean no new tax revenue for the state.
Instead of spending the additional dollars on infrastructure, education and social services, the state Department of Revenue would keep track of the amount of taxes collected online and redistribute it to taxpayers through tax reductions and giving tax breaks to in-state manufacturers.
This defeats the whole purpose of collecting the online tax to begin with and should be rejected.
The goal, after all, is to bring in new revenue to bolster state coffers — and almost every one of the 45 states that collect a sales tax are trying to figure out a successful way to achieve it.
Florida has plenty of bright lawmakers, savvy policy wonks and innovative educators who can come up with a workable plan, and the Legislature is more than capable of getting this done right this year.