SID SALTER: Mississippi leaves some taxes uncollected on catalog goods

By Sid Salter

Regardless the depth of budget cuts or the fiscal pain those cuts exact on essential services, tax increases don’t even have the proverbial snowball’s chance in Hell during a statewide general election year.
State legislators aren’t about to raise any new taxes during the same year that their names will be on the ballot for re-election. But facing a third year of crippling budget cuts, is it possible that lawmakers will consider fully collecting the taxes already on the books from everyone who by rights should pay?
Simply put, Mississippi retailers are required to collect 7 percent Mississippi sales tax on items not expressly exempt under state law. But if that same product is ordered online by a Mississippian from a company that doesn’t have a physical location or “nexus” in the state, then no Mississippi sales tax is due.
In other words, the out-of-state online seller has a 7 percent price advantage over a Mississippi mom-and-pop store selling the very same product.
The National Conference of State Legislatures projects that states will lose an estimated $8.6 billion in 2010 from failing to collect existing sales taxes levied by the states from online and catalog purchases. NCSL projects the total revenue loss to balloon to $37 billion from 2009 to 2012.
Mississippi is projected to lose $303.2 million in sales taxes due under the existing 7 percent sales tax by failing to collect that tax on online and catalog sales.
Twenty-four states (excluding Mississippi) already have complied with the Streamlined Sales and Use Tax Agreement, which enables volunteer sellers, both online and catalog, to collect sales taxes for the respective state. But Mississippi is supposedly working toward SSUTA compliance.
The Main Street Fairness Act, introduced in the U.S. House in July would require sellers to collect the tax. The legislation would require online or catalogue sellers to collect sales tax in states whether or not they have offices or stores in that state.
Closer to home, state Sen. Tommy Gollott, R-Biloxi, introduced Senate Bill 2927 in the Mississippi Legislature as a means of providing fiscal relief from massive budget cuts in state government over the last three years.
SB 2927 was a measure designed to make online sales by out-of-state retailers subject to existing state sales or use taxes paid by “mom-and-pop retailers. Gollott’s bill never made it to the Senate floor and died a relatively quiet death in the Senate Finance Committee.
But after enduring a Fiscal Year 2010 with 9.4 percent average budget cuts, adopting a FY 2011 state budget with about 13.5 percent budget cuts and facing a likely FY 2012 state budget not underpinned by federal stimulus funds that could make 20 percent to 23 percent budget cuts necessary, lawmakers are likely to give Gollott’s Web sales tax bill a second look during the 2011 regular session.
From a national standpoint, Web retailers have their own army of lobbyists employed to beat back both the Main Street Fairness Act in Congress and any state legislation like Gollott’s across the country.
On the other side are state and local governments that desperately need Web retailers to be on a level tax playing field with “mom-and-pop” retailers and big companies with a “nexus” in their states as Web sales increase. Otherwise, the existing sales tax base in undermined and other taxes have to be contemplated to replace the revenue.
Howls of protests aside, Web sales taxes aren’t new taxes. They are a full and fair collection of existing taxes.
Failure to collect existing state sales taxes fully and fairly discriminates against the poor and creates an unfair disadvantage for Mississippi businesses and employers.

Sid Salter is Perspective editor at the Clarion-Ledger. Contact him (601) 961-7084 or e-mail ssalter@clarionledger.com.