Florida lawmakers step in to internet sales tax debate

Feb 2, 2012

Florida lawmakers are looking into a number of bills aimed at collecting a sales tax for goods brought over the internet. Some estimate the state is losing out on hundreds of millions of dollars in uncollected taxes, but Regan McCarthy reports lawmakers say they’re more interested in trying to level the playing field for local businesses than making that money up.

Under current Florida law, citizens who buy something online and aren’t automatically charged a sales tax by the store are supposed to charge themselves the tax and send a check in to the government. But Senator Evelyn Lynn, a Daytona Beach Republican, says more often than not, that doesn’t happen. Lynn says there’s no mechanism for enforcing the rule. She says instead people are going to the web because without paying a tax, stuff is cheaper there.  And she says that makes it hard for “main street businesses” to compete.

“You’ve probably heard that Best Buy is now a showroom for online. People go into best buy they find what they really like, find out how much it is, try it out and do everything with it. Sometimes they even buy it and bring it back and then go online and find out that they can get it much cheaper because they don’t have to pay the tax.”

Senator Lynn presented a committee bill from the Budget Subcommittee on Finance and Tax aimed at tackling the issue. The measure had initially been drafted by Republican Senator Ellyn Bogdanoff of Fort Lauderdale, but Bogdanoff has since been moved to chair the Budget Subcommittee on Criminal and Civil Justice Appropriations after Republican Senator Mike Fasano of New Port Richey got booted from the seat. Lynn says the bill would protect businesses that otherwise have to compete with retailers who, because they don’t collect sales tax, can automatically charge a discounted price. Florida Retail Federation President Rick McAllister says that really hurts the state’s small businesses.

“And while the big businesses are screaming about this, they’re surviving most of them. The big buys, the book stores, the people that are easy to hurt, they’re not doing so well. The rest of them don’t like it. Its unfair, but it’s the small businesses that are really suffering. And the growth of small business, which is so vital to the state of Florida is going to suffer unless we fix this problem quickly.”

And Senator Gwen Margolis, a Miami Democrat, points out sales tax is a major source of revenue in the state.

The impact has been, especially on our revenue source, has been an incredible blow to the state, and I don’t think that we’ll ever see a year again that we don’t have a shortfall.”

Right now only stores with an actual location in the state are required to collect sales tax for internet sales. The committee bill would expand that so that retailers who use another organization to help them do or solicit business in the state would also have to collect and remit a sales tax. It would also require collection from companies with websites that have “click-throughs,” or links to online retailers like Amazon that pay a commission for sales stemming from their site. Florida Governor Rick Scott, who has pledged not to increase taxes has said he would sign an internet sales tax bill provided that it is revenue neutral. Lynn says the committee bill is because the measure stipulates that any money brought in from taxes collected for purchases made on the internet would be given back to Floridians. She says that could be done in any number of ways.

“So 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 on by our state.”

And Lynn says an internet sales tax is not a new tax. Citizens are already supposed to be paying it. She says Internet sales tax collection laws have been enacted in more than 20 other states. The bill was adopted by the Senate Tax and Finance Committee.

Several similar bills have been filed, including one by Senator Nancy Detert. Detert’s proposal is more stringent, though she’s said she is willing to amend her bill to match the Senate Finance and Tax committee’s measure. Several other Internet sales tax bills have been filed in the House, but House leaders have been hesitant to take up measures that could give the appearance of adding a new tax. Meanwhile there are rumors circulating about an offer from Amazon to build a location in Florida that would create more than 2,000 jobs if officials agree to exempt the company from paying the tax for at least for two years.