It’s Florida’s big secret. The state’s residents are supposed to pay taxes for online purchases. But most everybody knows that the state has no easy way to enforce the law, which requires retailers and e-companies with a physical presence in Florida to collect the 6 percent sales tax.
The biggest loophole of all? The law gives a free ride to out-of-state companies from collecting and sending to Tallahassee sales taxes from Florida buyers. That loophole puts the government, through its tax policy, picking winners and losers. From a business viewpoint, out-of-state Web companies can price out brick-and-mortar stores that hire Floridians — thanks to the loophole.
That’s unfair to Florida businesses, which makes U.S. Sen. Marco Rubio’s opposition to a proposed federal law that would apply sales taxes to most all interstate Internet sales particularly odd. He says he’s for consumers and no new taxes. Nice sound bite. What about tax fairness and closing loopholes that in essence punish the Sunshine State’s job-creators?
The federal proposal would allow states to collect taxes on Internet purchases their residents make from out-of-state companies. That’s long overdue.
Gov. Rick Scott just may have nudged Florida in the right direction with last week’s announcement that Amazon will be opening two distribution centers in Florida — a $300 million investment. Amazon’s physical presence will mean that, finally, the Seattle-based e-company will be required to collect sales taxes from Florida buyers. About 3,000 warehouse and distribution jobs would be created in the state, too.
Initially, Gov. Scott was reluctant to impose the sales tax obligation, and Amazon wanted a break for two years. A governor’s spokesperson now says Amazon will collect the tax when the law requires it.
The bigger issue is the unfair playing field the state’s loophole has created. Legislators keep sidestepping their duty to require all retailers to collect the sales tax — maintaining the status quo that punishes Florida-based retailers. The governor has said he would only support taxing Internet purchases if the new money would be offset by tax cuts overall. That shortsighted position ignores Florida is just recovering from plunging revenues during the Great Recession.
As Internet sales grow, taking business away from Florida-based stores, the stakes are high. New York, California and Texas already collect sales taxes on Web sales. Florida is the only large state that doesn’t.
Plus, Amazon has struck tax deals in other states. Last summer it started collecting sales taxes in Texas after that state fought for $269 million it said Amazon owed the Lone Star State for sales taxes, interest and penalties.
It’s way past time for Florida to level the business terrain and end Internet companies’ free ride.