Why Revenue Neutrality Is Key To Enacting An Internet Sales Tax In Florida
Online shoppers in Florida may have to budget an extra 6 or 7 percent for their Web purchases if State Sen. Nancy Detert's sales tax bill (SB 316) makes it through the Legislature this year.
But they may get some of that back. She's making the legislation politically palatable by ensuring most of the revenue is returned in the form of tax breaks.
The bill, which creates a sales tax enforcement and collection mechanism, was approved by a Senate appropriations subcommittee on Thursday and put on a fast-track for passage.
It requires on-line retailers that sell at least $10,000 worth of merchandise in Florida every year to report their sales to the state Department of Revenue, collect the sales tax on purchases and send all the money to Tallahassee.
Business and retail lobbies enthusiastically support the Internet sales tax since it promises to eliminate the substantial price advantage that online sellers have over bricks-n-mortar stores. Budget watchers have complained for years that not collecting the tax has left billions and billions of dollars on the table while state government slashed programs and laid off public employees.
But it's not billions and billions said Detert, a Republican from Venice, during a Finance and Tax subcommittee meeting on Thursday. "It's maybe $400 million a year" because of no-new-revenue sentiments among "our partners across the hall" (the House), she said. As a result, the state won't be allowed to keep much of it.
Instead, Detert told reporters that "the beneficiary of these new-found riches is going to be the consumer."
Revenue from the online sales tax -- which has always been required, just never collected -- will be used to reduce the communications services tax that people pay on their Internet, cable and telephone bills. If enough money comes in, it may also underwrite a yearly sales tax "holiday" of as much as three days.
That didn't stop Sen. Jeff Clemens, a Lake Worth Democrat, from voting with the 10-to-1 majority in favor of the bill. But the political revenue "offset" left him incredulous.
"I just want to point out the silliness that we're trying to collect a tax that we already should have been collecting but that we somehow have to offset it with something else," Clemens said.
Another possible problem: Local governments also get a cut of the communications tax. According to estimates based on a previous version of Detert's bill, the offset could cost them up to $20 million a year.
"We're going to hear from the cities," Detert predicted, while promising that the issue would be addressed as the bill makes it way through the Senate and House.
But the joy of state retailers -- even though the communications tax offset will continue to subsidize Internet sales, though in a smaller way -- was almost unadulterated. One by one, representatives of the Florida Chamber of Commerce, Associated Industries of Florida and the Florida Retail Federation (FRF) came to the committee microphone to support the bill.
It will bring competitive fairness back to retail, said Randy Miller of the FRF, even if Detert's bill is only an isolated solution.
"The real solution is the federal legislation being considered as we speak that will uniformly apply the requirement for all remote sellers to register and collect the tax for all the states," Miller said.
Detert is now walking her bill through the House and hoping its revenue offset will earn it the support of Gov. Rick Scott.