State legislators on Thursday began their push to tax online sales, moving forward on a pair of proposals that would force online-only companies—and people who buy goods on the Internet—to pay the state’s 6-percent sales tax.
The business community strongly supports the measures, stating that competition from retailers like Amazon and eBay are putting local companies out of business.
“It’s an issue of fairness,” said Rick McAllister, president and CEO of the Florida Retail Federation. “In our mind, it’s not about the taxes collected, it’s about the competitive nature of our business.”
According to current law, companies that do not have a physical presence in Florida—a store or a warehouse, for example—do not have to collect sales taxes here. With a growing number of states pushing so-called “e-fairness” bills, proponents believe this will be the year that an e-tax law passes.
But the law, in effect, would lead to higher taxes on shoppers, with some estimates pegging the cost as high as $1 billion per year. That’s about $50 for every man, woman and child in Florida, and would fall most heavily on avid online shoppers, costing some hundreds of dollars each year.
One of the proposals, introduced Thursday in a Senate committee, would offset that tax hike with some sort of consumer tax break. Under that proposal, the Department of Revenue would track the amount of money brought in, and consumers would get a tax break roughly equal to that amount.
“It could be the sales tax holiday, it could be lowering the tax rate, it could be implementing any other tax relief that is decided upon by our state,” said Sen. Evelyn Lynn, R-Ormond Beach, who is backing the legislation. Gov. Rick Scott has said he would only consider an online tax if it was revenue neutral, meaning it would be offset by tax relief for consumers.
A second bill, passed out of Senate Committee on Commerce and Tourism on Thursday, does not include a provision for revenue neutrality. Sen. Nancy Detert, R-Venice, who is sponsoring the bill, also pitched it as a way to level the playing field for local businesses.
“They’re the ones that contribute to Little League, they’re the ones that pay for a sign at the high-school football game,” she said. “On top of supporting their local town, they pay property tax, and they collect sales tax on behalf of us, and then we put them at a total financial disadvantage.”
As more consumers turn to the Internet to do their shopping, several states have moved to collect additional tax revenue from online retailers. At least 10 states, including California and New York, have passed e-tax legislation in recent years.
But the process has been rocky, as online-only companies have fought back against the new taxes.
Amazon filed a lawsuit against New York challenging the constitutionality of that state’s e-tax law, and has indicated that it would fight vigorously against states that tax online sales. In California, Amazon fired more than 25,000 of its affiliates after that state passed a law stating that the company’s network of online marketers created a physical presence.
Other states have offered Amazon sales tax breaks, in order to encourage the growing company to build outposts and bring jobs to their residents.
Amazon is seeking a similar deal in Florida. The online retailer is talking to state legislators about spending up to $200 million to build distribution centers in Florida, creating as many as 3,000 jobs.
Amazon has said that it will only build the centers if it is given a break on sales taxes until 2014. A late-filed amendment to Detert’s bill would make it easier for companies like Amazon to strike a tax-break deal with the governor’s office.
The business community has balked at the special tax deal proposal, and is moving forward with its push to get an online tax bill passed this year.
“We just want them to play by the same rules that everyone else plays by, and not try to skirt that with this particular loophole,” said McAllister.