SID SALTER: GOP House leaders face tough vote on online sales tax

By Sid Salter

The U.S. Senate is apparently on a strong arc toward finally passing a reasonable online sales tax bill in the form of the Marketplace Fairness Act. The Senate this week voted 74-20 to begin debate of the bill, which means more than few Republicans there are at least willing to talk about the concept.
The legislation would allow states to require online retailers to collect the same state and local sales taxes from their customers as customers at bricks-and-mortar stores are required to collect. Current law only allows states to require retailers with a physical location in the state to collect such taxes – giving online retailers an advantage over traditional stores and robbing states of revenues to which they are entitled under laws written in great measure before online technology was developed.
The issue has been around for many years. For most of those years, conservatives were able to beat back efforts to address the inequities of the existing laws. But as the recession and slow recovery eroded state tax revenues, the idea of taking a political stance in favor of full collection of existing sales taxes became more and more palatable when the alternative was either deeper budget cuts or actually raising existing taxes or levying new ones.
In the political dust storm of misinformation and disinformation about online sales taxes, there are a few key things to remember. First, we’re not talking about new taxes or a tax increase. Sales taxes on have been on the books in Mississippi since 1932 and the law makes no distinction about exemptions from one method of sale to another. Under the law, the buyer owes the tax at the time the transaction is made with the seller and the seller is charged with collecting that tax.
Second, we’re not talking about legislation that burdens small online businesses. The legislation allows businesses with less than $1 million in out-of-state online sales an exemption.
Third, opponents wail about the difficulty and complexity of collecting the tax. In an age in which most households have a relatively inexpensive television that will decode a signal sent from a satellite in outer space and own smart phones that will allow people to turn the lights off and on in their home from across the country, that argument really doesn’t pass the straight face test. Software already exists to do the job automatically in online shopping carts.
Fourth, there is the “don’t tax the Internet” cry. Online sales taxes in no way tax the Internet in much the same way that the sales tax you pay at the hardware store in downtown Tupelo doesn’t tax your drive to the store. Finally, there’s the argument that collecting existing sales taxes will somehow derail the emerging online commerce industry. Baloney! Online retail sales account for a quarter trillion dollar industry today and are expected to double within a very few years.
U.S. House members from Mississippi may well choose to vote against the Marketplace Fairness Act and do so on the false premise that it represents “raising taxes” or “new taxes.” But doing so creates two interesting consequences.
First, there’s explaining to the state’s Main Street merchants why they voted to give out-of-state sellers at least a 7 percent advantage over them. And then there’s the matter of explaining to taxpayers why paying sales tax at a Mississippi store counter is required, but that the same tax for the same product should not be due then the transaction is made online.
SID SALTER is a syndicated columnist. Contact him at 601-507-8004 or sidsalter@sidsalter.com.