INTERNET SALES TAX
The issue: Tax Watch group urges collecting more taxes on internet sales tax to fill revenue gap
Our opinion: A good decision
The Covid-19 pandemic has blown a huge hole in the state budget as state sales tax revenues are down due to the drop in tourism and stay-at-home orders that have kept people from shopping.
According to a report from Florida Tax Watch, state revenues for April were $878 million below estimates, with the drop in tourism being the largest driver, accounting for a $598.2 million decline in sales tax revenues.
One proposal to fill the revenue gap is to collect sales taxes on all Internet sales. The proposal renews what has been a long-running debate on Internet sales taxes. Currently, companies with a physical presence in the state, such as a retail location or distribution warehouse, must collect tax on their sales.
However, many businesses which sell online to Floridians but do not have a physical presence in the state do not collect sales tax. This has long been a point of contention, with Florida retailers complaining that companies who do not collect sales taxes have an unfair advantage over those who collect them.
A study earlier this year said that legislation to require sales tax on all internet sales would generate $479 million a year for the state and $132.9 million a year for local governments.
This year, two versions of the so-called “E-fairness” legislation cleared two Senate committees but never got heard in the House. Whether the sales tax revenue losses from the pandemic will change the calculus on this kind of legislation is still unknown. Regardless, this is legislation that needs to pass as a simple matter of fairness.
The proposal to require all companies selling items at retail to Florida customers to collect sales tax is not a proposal for a new tax. It would require that instead of just some companies collecting the tax, all companies would collect it.
Paying tax on all retail sales is already required under Florida statute. The tax on untaxed retail purchases is called a use tax, and should be paid on the use or consumption of taxable goods or services when sales tax was not paid at the time of purchase. Although required by statute, this tax is almost uniformly ignored by consumers.
Legislation requiring equal collection of sales taxes in the state is a matter of fairness to local merchants who are already suffering enough from enforced closure. They should at least be able to compete equally, not be hampered by the fact they collect sales taxes and some other merchants do not.