Senate edges closer to vote on Internet sales tax

WASHINGTON Thu Apr 18, 2013 5:32pm EDT

Senate Majority Leader Harry Reid (D-NV) holds a news conference on Capitol Hill in Washington April 9, 2013. REUTERS/Gary Cameron

Senate Majority Leader Harry Reid (D-NV) holds a news conference on Capitol Hill in Washington April 9, 2013.

Credit: Reuters/Gary Cameron

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WASHINGTON (Reuters) - Legislation giving states the power to compel retailers outside their borders to collect online sales taxes, a touchy subject for Internet merchants, is likely to move forward in the Senate next week.

Senate Majority Leader Harry Reid on Thursday filed a motion in support of the measure. Currently, states rely on consumers to self-report, which they rarely do.

If approved, the change would be a win for brick-and-mortar stores like Wal-Mart Stores Inc., the world's biggest retailer, which backs the legislation.

At the moment, states can only require online merchants with physical stores or affiliates within their borders to collect sales tax, giving online-only retailers such as Amazon.com Inc a price advantage in many markets.

As a results of Reid's motion, the Senate was expected to vote on Monday on whether to end debate and move the measure forward. A vote on the legislation could come later in the week. Backers say they have the 60 votes needed to end debate.

Momentum has been building since 75 of 100 senators last month voted for a nonbinding version of the bill. The road ahead for the measure is bumpier in the House of Representatives, where some Republicans view it as a tax hike.

One House sponsor, conservative Representative Steve Womack, has been lobbying fellow Republicans to support the measure, according to an aide.

But Republican Bob Goodlatte, chairman of the Judiciary Committee, where the bill would have to go through, said he is skeptical.

"While it attempts to make tax collection simpler, it still has a long way to go," Goodlatte said.

Womack is from Arkansas, home of Walmart. Amazon.com also supports the measure, but others including eBay Inc oppose it.

(Reporting by Kim Dixon and Nanette Byrnes; Editing by Kevin Drawbaugh and Xavier Briand)

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Comments (7)
chekovmerlin wrote:
Pray tell, who (what level of government and what agency) is going to police this? What kind of horrendous bureaucracy is going to go out and arrest people in small companies and/or large (but not as large as Amazon, Costco, Wal-Mart, etc.) for not doing the state’s job of enforcing their own laws. You need enforcement for this and no one is talking about that. Are you going to federalize the collection of state and local taxes? Wow!

Apr 18, 2013 9:55pm EDT  --  Report as abuse
usagadfly wrote:
This is mainly a threat to American jobs and tax revenues.

Such a provision would drive internet businesses out of the country, but not off of the internet. Perhaps to another NAFTA country. By operating from northern Mexico, websites could essentially become “Mexican” websites, or perhaps some other country. The goods could be warehoused and shipped from a city such as Nuevo Laredo, which simply would cause the US citizens who currently work in such operations to lose their jobs and the States lose the taxes those former workers paid. And FedEx and UPS simply drive trucks across the border. No sales tax. No income tax. No import duties. Just another blow to US competitiveness to subsidize outmoded brick and mortar retail operations. They might also subsidize paper newspapers to “preserve” that industry.

This is, simply put, a bad idea at a worse time. States will be cutting their take, not increasing it. More US industry moves out of the country via extraterritorial taxation attempts. And it will not put business back in grossly overtaxed brick and mortar retailers.

Apr 18, 2013 11:49pm EDT  --  Report as abuse
dynamic88 wrote:
Go ahead an pass this. And watch internet sales plummet. And consumer spending right along with it. Dumbest thing i have heard in a long time.

Apr 18, 2013 11:58pm EDT  --  Report as abuse
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