Gunn touts internet tax for road funding

GUNN

GUNN

By Bobby Harrison

Daily Journal Jackson Bureau

JACKSON – House Speaker Philip Gunn, R-Clinton, said recently the only revenue available during the 2017 session to address the state’s road and bridge needs comes from a bill that tries to force internet companies to collect for the state the 7 percent tax on retail items.

The bill, which has passed the House, diverts 70 percent of the projected revenue to the state for infrastructure maintenance and 15 percent each to the cities and counties for the same purpose.

Gunn said it has been estimated if the legislation becomes law, it will generate between $75 million and $125 million in new revenue – far short of the $400 million cited by the Department of Transportation as needed yearly to address the state’s infrastructure needs.

It is far from certain that the legislation will pass the Senate. Senate Finance Chair Joey Fillingane, R-Sumrall, said Tuesday that under existing law, the 7 percent sales tax already is supposed to be paid to the state. He pointed out that new Revenue Commissioner Herb Frierson, the former House Appropriations chair, has negotiated a deal where internet giant retailer Amazon has agreed to collect the tax for the state. That agreement is expected to generate between $15 million and $30 million per year in new revenue for the state just on sales by Amazon.

In addition, Fillingane said Frierson has sent out 35 letters to other internet retailers trying to convince them to follow Amazon’s lead.

“At first blush, maybe we should look at what already is being done” by Frierson “to see if it needs to be supported” with additional legislation, Fillingane said. “Generally speaking, we like to pass bills lowering taxes, not raising them.”

Under existing state law, people who purchase items remotely, such as online or through catalog sales, are supposed to report and pay the 7 percent tax when filing their tax returns. But few do. The state collects less than $300,000 per year from the effort.

Plus, a U.S. Supreme Court ruling has said that the state cannot force companies that do not have a “brick and mortar” presence in a state to collect and remit to the state the tax.

The House bill would try to force the companies to collect the tax and perhaps force the judiciary to revisit the Supreme Court ruling. Other states are pursuing the same path.

But Fillingane said if the companies voluntarily collect the tax, such legislation might not be needed.

The only problem from the perspective of road and bridge work is that if the tax is collected under current law, it would go directly to state coffers to be dispersed by the Legislature. It would not be directed for road and bridge repairs, and none of the revenue would be directed to the local governments.

The Mississippi Economic Council has proposed a plan to spend $375 million annually on infrastructure needs. That plan would require some type of tax increase. Gunn said before a majority of the House would agree to such a plan, a study would need to be done by “an impartial third party – somebody who does not have a dog in the hunt so to speak.”

Blake Wilson, president of the MEC, said he likes Gunn’s proposal – funding about $100 million of the infrastructure needs this year through the internet tax while doing additional research.

In a statement, Wilson said, “This makes sense, and we appreciate the speaker’s approach. MEC also recognizes that as the legislative process continues, there may be other lanes of opportunity added toward the goal of fixing Mississippi’s crumbling road and bridge infrastructure. The key here is progress – in the same direction – on a common road to success.”

Melinda McGrath, the executive director of the Department of Transportation, said ongoing inspections of the state’s roads and bridges using federal guidelines identifies those in need of repair.

But she added the revenue from the internet sales tax bill, while not enough to address all the needs, “is a win-win for the state, and we are grateful. I do understand how difficult this is because there are so many needs in the state, but public safety is paramount.”

The Department of Transportation has said the subpar infrastructure is a public safety issue.

bobby.harrison@journalinc.com

Twitter: @BobbyHarrison9

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