Many Florida lawmakers want internet sales tax but some want to divert revenue to tax cuts

12/29/11 Janelle Irwin
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With the 2012 legislative session just around the corner, state lawmakers are facing some tough decisions. One proposed law would close an internet sales tax loophole. Some politicians want to make sure the tax doesn’t increase revenue for the state.

When a consumer makes a purchase online, the transaction appears to be tax free. What most consumers don’t know, and what internet retailers rarely tell them, is that the consumer is supposed to calculate and pay the sales tax directly to the state. That law is often ignored and it’s virtually unenforceable. State Representative Rick Kriseman has been vocal in the decade-long debate about closing that loophole. He said allowing internet retail giants like a 7-percent advantage over other stores robs Florida of revenue and jobs.

“It gives out of state businesses that really have no contact with our state and our citizens don’t benefit from their success. It gives them an unfair advantage over a brick and mortar business that’s here in our state, that’s employing people in our state and that’s paying taxes to our state.”

Most Florida policy makers agree that taxes on internet sales need to be collected, but Kriseman said some consumers aren’t looking forward to paying what they technically owe anyway.

“What it comes down to is they’ve enjoyed the fact that they haven’t had to pay on a purchase what they would have otherwise been paying. So that means that they’re going to have to pay a little bit more and they don’t want to do that.”

Carla Jimenez is the owner of Tampa’s Inkwood Books. She has been a local voice in a state and nationwide debate over internet sales tax. That means she hears from people who support her push to force internet retailers to collect state sales tax. But she also hears from those who don’t.

“Saying things like, anybody who doesn’t understand that the lowest price is the only thing that matters should just go out of business and if you can’t compete, just close your doors. I mean, there are some people who I think are not understanding the whole picture when they say things like that. But there are people who hear the word tax and a red flag goes up and it just makes them angry and upset and hostile.”

Jimenez said her store has taken a blow from the rising popularity of online shopping.

“Our little snap shot of our bookstore is such a small part of this story but it’s repeated on Main Streets and on blocks all over the place and that is we used to be open longer hours, we used to employ more people and we certainly used to have more money coming from the door, there’s no question, and more physical traffic.”

Estimates vary as to how much revenue the state is losing from online sales where the tax is not voluntarily remitted by the consumer. Florida Tax Watch’s president and CEO Dominic Calabro guessed it might be around 50 million dollars; and he said that is a conservative estimate.

“We would like to take that 50 million dollars and then use that collection of those funds to reduce other taxes that are keeping businesses from moving to Florida or encouraging them not to stay in Florida.”

The plan he’s referring to aligns with Governor Rick Scott’s recent statement that he would sign legislation to close the loophole, but only if it is revenue neutral. That is, he doesn’t want the state to net any money from collecting a tax on internet sales. It’s part of his promise to oppose any new tax. Calabro said he doesn’t consider this a new tax, but agrees with the Governor’s attempt to divert the money to other tax cuts.

“Remote sellers are stealing Florida jobs. It’s unilateral disarmament and we commend Governor Rick Scott for understanding that and asking that two good deeds be done. One, collect the taxes under the law and two, use those revenues to reduce another tax on businesses, another tax on capital, another tax that impairs economic growth and job creation in Florida. So, two good deeds make a double correction.”

Some Democrats want to use the tax revenue to put a dent in Florida’s daunting deficit. But different versions of the legislation being batted around Tallahassee would instead divert the funds into corporate tax cuts, property or sales tax decreases or tax holidays. State Representative Rick Kriseman doesn’t agree with the Governor’s caveat to funnel internet sales tax revenue into new tax cuts.

“Yeah, it is counter-productive. I was going to use a different word. My word probably would have sounded something more or rhymed with cupid. But I think that’s bad policy.”

Proposed bills to close the internet sales tax loopholes will be considered during the upcoming legislative session that begins January 10.

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I am standing with Rick. Collect the sales taxes and use them toward the deficit. The one thing this state does not need at the moment is more tax breaks for corporate America. We need to put the money back into education and the needs of the people of Florida.