SID SALTER: Web sales tax not new, but it is fair

By Sid Salter

STARKVILLE – It is telling that Gov. Haley Barbour – the man who was famously “against raising anybody’s taxes” – waited until he had one foot out the door of state government to embrace a tax that should have been collected all along.
In recent days, Barbour came out in favor of the Marketplace Fairness Act – a federal plan to tax e-commerce. The legislation would allow states to collect taxes on items purchased online or through catalogs which currently isn’t collected because of a federal moratorium.
In the infancy of the online or e-commerce boom, Barbour staunchly opposed collecting existing state sales taxes on e-commerce. That opposition from Barbour came despite the obvious unfairness to local merchants who were forced under state law to collect state sales taxes while the online merchants without a physical business domicile in Mississippi were allowed to operate at a 7 percent price advantage.
In other words, the hammer you bought at the local hardware store cost you 7 percent more than the same hammer purchased online. Local merchants and the trade and business associations that represented them howled at the unfairness of the tax policy, but like Barbour, no conservative politician wanted to be accused of raising “anybody’s taxes” so the left the inequity to fester.
But now, Barbour sees it differently: “The federal government ought to get rid of that policy and allow states to collect sales tax,” Barbour said in recent days.
Under the Marketplace Fairness Act, states would have to rewrite their tax laws in certain areas to participate. In particular, states would have to write their laws to require that the sales tax be collected at the point of delivery rather than at the point of sale.
But Barbour’s original claim – that he was against “raising anybody’s taxes” – will still be true. Collecting sales tax on online purchases of items that are already subject to sales tax in Mississippi isn’t a new tax by any stretch of the imagination. It’s an existing tax that the state has failed to collect and that big corporations have fought to avoid.
Congress gave those corporations cover. But now, even mighty Amazon.com has seen the light and agreed to voluntarily collect state sales tax. The technology exists to do it. And the failure to do so remains as unfair to mom-and-pop, Main Street merchants as it was a decade ago.
A 2009 University of Tennessee study estimated that Mississippi lost between $102.1 million and $117.4 million in uncollected legal sales taxes due in 2010 and estimated Mississippi’s online sales tax collection losses between the period of 2007 and 2012 to be between $616.5 million and $667.6 million. That’s not from new taxes, that’s from uncollected present taxes.
Perhaps there’s one argument that conservative Mississippi lawmakers can embrace. Congress, after years of letting the lobbyists hold sway over the online sales tax issue, has the issue in its sights. If individual states like Mississippi don’t move quickly and decisively to collect existing state sales taxes and use that revenue to fund state government, then Congress is certain to look at online sales as a potential federal tax source.
But what is clear is that as Barbour was in 2003, Bryant is on record against collecting existing state sales taxes on online sales. Why? He’s planning on facing the voters again and doesn’t want to do so with accusations that he raised taxes.
Still, it’s clear that online sales tax collection isn’t a new tax at all. It’s full and fair collection of an existing tax that should be collected.
Sid Salter is a syndicated columnist. Contact him at sidsalter@sidsalter.com