Tax On Internet Purchases? Maybe, Says State Senator
BY STATE SEN. ELLYN BOGDANOFF
It is time to have an honest discussion about “internet sales tax” and separate fact from fiction. First, this issue is undoubtedly best handled at the federal level. Unfortunately, like many other issues, when the federal government fails to act, the public gets restless and looks to state government for solutions.
Without question, this is a challenging topic and pressure is mounting from our in-state brick-and-mortar businesses to do something about the “unfair” tax advantage that on-line retailers enjoy. There is a grassroots movement from the business groups to encourage Florida to take the lead from California and New York and pass laws that will bring the largest on-line retailers, such as Amazon.com, to the bargaining table. As Chair of the Finance and Tax Committee, I recently held a workshop which confirmed the challenges that confront finding a state, legislative solution.
Those that oppose the tax provide another obstacle claiming that it is a “new” tax. This is a myth. The sales tax on any item purchased by a Florida resident must be paid. The problem is that it has to be paid by the consumer (bold/italicize that) because the state does not have a legal nexus to force the on-line retailer to collect and remit the tax. Most of the public is unaware of this fact. Further, since the Department of Revenue has no way of tracking online purchases, the perception builds that there is no tax on internet sales. Again, this is far from the truth.
Another myth is that the lack of taxes paid by retailers gives them an unfair advantage and is sending more consumers to the internet. However, it is convenience (italicize), not a sales-tax savings, that drives people toward internet purchases. Internet sales are the future; people find it more convenient and cheaper. Goods are often cheaper online because the internet retailers have less overhead and likely buy in larger quantities. I understand that our brick-and-mortar retailers are often the showrooms for what people later purchase on-line, but it is all a part of our changing economy. Retail is an ever-changing industry. We already went from mom-and-pops to larger retailers. Some mom-and-pops survived and some did not. The same will go for those who have to compete with on-line retailers.
Having said that, the time has come to address this issue and we will, but it will come with a price. Undoubtedly, as in other states that have passed similar laws, there will be constitutional challenges to this legislation. Politically, we will need to make sure that any change we make is revenue neutral to the state. The public policy driving any law that deals with internet sales tax should focus on fairness and not revenue for the state. Since it is indeterminate how much we would receive in internet sales tax, we have proposed a quarterly sales tax holiday after receiving reports with actual collection figures from the Department of Revenue.
Everyone should come out a winner. The brick-and-mortar retailers will no longer be at a sales tax disadvantage. Those that oppose the idea as a new tax will feel comfortable that we are not increasing the tax burden on the citizens. Last but not least, the consumer wins big with a quarterly sales tax holiday to offset the earnings and the brick-and-mortar retailers get an extra boost (sales tax holiday) to reward their persistence.
(Ellyn Bogdanoff reprsent District 25, which encompasses Northeast Broward and portions of Palm Beach County. This article is particularly interesting since she is the chair of the Florida Senate Budget Subcommittee on Finance and Tax. Disclosure: My son, Aaron, is Bogdanoff’s senior legislative aide.)
January 5th, 2012 at 11:46 am
Another opportunity for government to gouge consumers who take the time to comparison shop, weighing shipping costs vs. sales tax.
January 5th, 2012 at 12:29 pm
Hey Buddy;
Here’s an interesting take on this subject — why Best Buy will end up going out of business.
http://www.forbes.com/sites/larrydownes/2012/01/02/why-best-buy-is-going-out-of-business-gradually/4/
January 5th, 2012 at 1:14 pm
Join the Middle Class Champions, the Democrat Rep’s of the Broward Delegation to let Rep George Moritias and his fellow women hating celebrants form Coral Ridge Pres its time for a big wake up call on January 11 from 4-7pm in front of Rep Moritias office at Oakland and Federal. We will show those tea party losers that hang out across the street how to stage a protest. The rumor is that soon to be newest member of the Middle Class Champions, future State Rep Barbara Stern is going to announce at the event she will run against Rep George Moritias and this time she WILL beat him. Thank you to Sean Phillippi for all your hard work putting this together.
AWAKE THE STATE!!!!!!!!!!!
FROM BUDDY:
BARBRA STERN WRITES:”I HAVE NO INTENTION OF MAKING ANY ANNOUNCEMENT AT THE AWAKE THE STATE RALLY NOT HAVE I COMMITTED TO ATTEND IT.”
January 5th, 2012 at 5:14 pm
We collect sales tax on all sales in Florida. It doesn’t matter if the sale is made in person, on the phone or over the internet.
As a business owner that does business through bricks and mortar as well as on-line, I am sick and tired of hearing how there is no on-line sales tax. There is sales tax on all purchases in Florida. If a business isn’t collecting and remitting on the sales, it has nothing to do with how the sale is made…it has to do with the business not following the law.
FROM BUDDY:
You are right. Sales tax is required on all Internet purchases. If the seller doesn’t collect the tax, the Florida buyer is responsible for it. This is the provision of the tax law called informally in Tallahassee the DOR Tax. That’s because the only people who pay the tax on Internet purchases themselves are Department of Revenue employees…and maybe not all of them.
The DOR has no jurisdiction over businesses outside of this state at the present time. In addition, there are too many Internet sellers to keep up with.
Again, it is not just the seller who is ignoring the law. It is 99.999 % of the buyers, too.
January 5th, 2012 at 6:00 pm
This measure will help local business! Sales tax is sales tax whether you buy something in the store or online. Why should we give a competitive advantage to retailers in other states, shop local, shop Florida!
January 5th, 2012 at 6:26 pm
Looks like another GOP tax and spend double crosser will have to go.
January 6th, 2012 at 10:33 am
Jacked up and “local retailer” are both right. Lynn Helm (see above) is a tax cheat. She is supporting out of state enterprise at the expense of Florida merchants.
January 6th, 2012 at 8:28 pm
All your supporters are backing you barbra. P.S- I have a special project for your mom-details later.Go Barbra Stern go-pay no attention to some of these wack jobs….
January 15th, 2012 at 1:55 pm
The senator makes a good point but she glosses over the very real constitutional challenge to legislation shes proposing. A Florida agency cannot bring any party to court in Florida or serve valid process on a company outside of the jurisdiction that does not even “purposely avail” itself to Florida citizens. Merely having a website has been held by the us supreme court not to be enough. Whether something like amazon would be subject to Florida jurisdiction might be difficult legal question due to the sheer volume of business, but smaller retailers with smaller sales that do not specifically market to floridians cannot be brought to court
January 16th, 2012 at 3:12 pm
Of course Floridians should pay tax on internet purchases. We need more revenue. Makes sense to me.
And Barak, can you state that in “ENGLISH”? are you saying that if the legislature passes a law to collect tax on internet purchases, that Fla won’t be able to collect it because someone will challenge it constitutionally? And is that state constitution or Federal?