Some lawmakers say taxing internet sales will fill the state's budget holes
By Regan McCarthy
Tallahassee, FL – With the state facing a two, to three billion-dollar budget shortfall in the coming year. Legislators have said that'll likely mean cuts for programs and services people care about, but Regan McCarthy reports some lawmakers are proposing a different idea that could give the state more revenue.
State Representative Michelle Rehwinkel Vasilinda, a Democrat from Tallahassee, is putting forward legislation once again that she says would increase the state's collection of internet sales tax. And she says she's got the business community behind her, which leaves her wondering why it hasn't passed yet.
"If those guys want the bill and those hard-nosed business people are usually the people that play with my Republican Colleagues."
A study sponsored by the Florida Alliance for Main Street Fairness, a group pushing to close what it's calling the sales tax loophole, says the state lost 374-million dollars in lost internet sales tax revenue in 2010. Under the current law a store with a bricks and mortar location in the state is required to collect and remit sales tax for any online purchase made here. But companies without physical locations in the state, e-bay or Amazon, for example, don't have to. Instead, Rehwinkel-Vasilinda says Floridians are expected to charge themselves the tax.
"There are so many Floridians who are actually breaking the law and don't know about it. It's a rule of law that you have to pay the sales tax. If the store is not doing the convenience, the vendor, the Amazon, is not collecting and remitting the sales tax to Florida you as the purchaser as supposed go to the Department of Revenue's website, pull down the form and pay the tax."
Florida Department of Revenue Spokeswoman Renee Waters says the state received about 5,561 self remitted checks in the 2010, 2011 year for a total of 8.7-million dollars. She says most of those are turned in quarterly. Vaslinda suspects they're mostly from corporations. Amanda Weld who's now shopping at a major book store in Tallahassee says she's never heard of the law and says she often makes purchases online because that's where she finds the lowest price.
"As a teacher I definitely will preview the books first and then I sometimes find better deals online. I look for the best deal."
Randy Miller is the executive vice president of the Florida Retail Federation, which supports Rehwinkel-Vasilinda's measure. Miller says what Weld does is common. He says the federation's research shows that people don't realize they're making purchases online because they're not charged a tax. They do it because they know it somehow costs less money. Miller says it's not fair.
"We have an inequity between the two identical products. One purchased locally is subject to tax at 10-percent and the other purchased over the internet and shipped here is not subject to it. So you've got a 7.5-percent price differential that the government has created."
And Rehwinkel Vasilinda says that's a big problem. She says stores, like Tallahassee's recently closed Borders, employ people here. Meanwhile she says stores like Amazon don't provide Floridians in the state with any jobs.
"Borders had to contend with the extra tax piece at the end of their bill where Amazon doesn't and let me tell you something Amazon is pricing their goods absolutely perfectly so they can get as much profit as they can while still taking care of the transportation and shipping costs, but knowing that they don't have to do the tax. So they're making a nice hefty profit."
Rehwinkel-Vasilinda's bill would make Florida a member of a compact of 24 other states that encourage businesses to collect and remit sales tax. The stores would be considered "good corporate citizens," and the state wouldn't pursue any kind of action against a participating company if the amount of tax collected were wrong. It's about all the state can do. Since it doesn't have jurisdiction over companies that aren't in Florida participation is only voluntary. The move is a bipartisan one. Senator Evelyn Lynn, a Republican from Daytona Beach has filed a companion bill. But neither party's effort is getting much traction from with legislative leadership. House Speaker Dean Cannon is non-committal but indicates the measure doesn't have enough teeth.
"There's a balance between the legitimate concerns expressed by brick and mortar retailers, the legitimate philosophical concerns with attempting to regulate internet commerce and the fact that until there's a national rule that standardizes how that's handled, I see the complexity of that issue making it an uphill battle."
Rehwinkel-Vasilinda has also filed a memorial bill that would encourage congress to pass a federal rule to let all states have the jurisdiction needed to collect sales tax from businesses making sales in their state. Opponents argue that the rule would put a new tax in place, but Rehwinkel-Vasilinda argues it's a tax citizen are already supposed to be paying. Officials expect the number of internet and "remote sales" to jump dramatically as the Holiday season kick starts this week.