Online sales tax would fund back-to-school tax holiday
Online purchases through Amazon, eBay or any other large out-of-state Internet-based retailers would be subject to enforced collection of sales tax in Florida – but with a nice catch for brick and mortar shoppers: a longer back-to-school sales tax holiday that could even last the whole year.
The sales tax holiday on clothing and school items would begin the first Friday of August, but with the number of days depending on the amount of revenue collected through the Internet tax under the plan. The idea is part of a committee bill sent from the House Finance and Tax Committee on Thursday to the House Speakers’ Office.
Subcommittee Chairman Rep. Ritch Workman, R-Melbourne, said he settled on the proposal to meet a directive to keep the tax proposal revenue neutral – cut the regular sales tax by the same amount as is raised in a new Internet tax. He also said a "sales tax for a sales tax" may easier for people to understand than other tax swap ideas that have been considered.
Some lawmakers had discussed the possibility of offsetting a cut to or elimination of the Communications Services Tax – or CST – on various communications services, with some sort of increase in sales tax. But the communications tax idea would be very difficult to explain, especially for lawmakers concerned about appearing to support a tax hike.
"If you have to use initials for a sales tax, you lose,” Workman said. “If I try to tell you I’m offsetting the sales tax with CST, half my voters are just in a daze."
Rep. Jim Waldman, D-Coconut Creek, voted Thursday for the bill, but he joined a handful of legislators who objected to requiring the tax to be offset.
Lawmakers for years have looked at online sales as a possible source of tax revenue – noting that it is supposed to be collected, but isn't because there's no mechanism for enforcing it,. particularly with out-of-state sellers. But few Republicans have been willing to support plans to collect tax on Internet purchases for fear of being thought to be in favor of raising taxes.
Amazon is in court with New York and fighting Georgia over the collection of sales tax Similar litigation would be expected in Florida if the idea of having the state collect tax from it and other online companies were to go forward.
Right now, buyers are expected to self-report purchases on the Internet and pay the tax. There's no obligation on the companies like Amazon. But hardly anyone ever does pay it. Workman’s proposal also would grant a blanket pardon to all Floridians who have made purchases over the Internet to large companies that didn’t impose the state’s sales tax.
The idea of requiring out-of-state companies that sell to Floridians via the Internet to collect the state sales tax has long been supported by Florida’s business advocates, including the Florida Chamber of Commerce and the Florida Retail Federation.
"This will preserve jobs and restore equality to in-state retailers,” said Randy Miller, the executive vice president of the Florida Retail Federation. "Technology is changing. We know it and we have to change."
House Speaker Will Weatherford, R-Wesley Chapel, will have to assign the bill to House committees for further review. A similar proposal is expected in the Senate.
If approved by the Legislature and signed into law by Gov. Rick Scott, the sales tax collections would be required starting Jan. 1, 2014.
Workman said while revenue projections vary, the shortest the holiday on back-to-school items would last is three days. But how long it would last would be determined by a revenue forecast on the Internet sales tax.
“If revenues are so great that there are more than 365 days of a sales tax holiday on school supplies, those funds would be used to proportionally to reduce the (state) sales and use tax" Workman said.
The committee on Thursday also backed Scott’s call to eliminate sales taxes on manufacturing equipment (HB 4013), one of his top priorities for the on-going legislative session.
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