Wednesday, March 27, 2013

Still shaking down Main Street

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For the sixth straight year, a bill to impose state sales taxes on online sales has failed to see the light of day in the Idaho Legislature.

Last Friday, Rep. Lance Clow, R-Twin Falls, introduced a bill that would have put the state in a position to tax online sales if Congress passes new laws enabling states to do so. Twenty-four states are part of the Streamlined Sales Tax Project, which is seeking a system to make online tax collections easy. Idaho could have become part of that project.

But the House Revenue and Taxation Committee voted 10-5 against even introducing Clow’s bill.

Clow knew the bill wouldn’t get a hearing this late in the legislative session. He told the committee that his purpose was to make the bill available to the public so that businesses could find out what might be involved if the state is finally allowed to tax online sales.

Unless Congress takes action, states are prohibited from taxing online sales of businesses without a physical presence in a state because of a 1992 U.S. Supreme Court decision in Quill v. North Dakota. 

The decision was based, in part, on the difficulty of collecting sales taxes for multiple states. Today’s high-powered computers have made that argument moot.

Introduction of Clow’s bill would have given bricks-and-mortar retailers—who are taxed while their online brethren are not—hope that relief may be on the horizon. Instead, the committee voted with Rep. Lenore Barrett, R-Challis, who characterized taxing online sales as a “tax increase.” If so, then Barrett should champion a bill to tax online sales while reducing the state sales tax on every other business.

It’s time for the state to quit shaking down businesses on Main Street while giving e-businesses a free ride.

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