Bill instituting Internet sales tax unveiled
Published: Tuesday, February 5, 2013 at 5:39 p.m.
Last Modified: Tuesday, February 5, 2013 at 5:39 p.m.
TALLAHASSEE — Florida has long refused to require out-of-state retailers to pay a sales tax on Internet purchases here. But that may finally change this year.
Proponents of a measure to require the Internet sales tax have come up with a new strategy to make the proposal more viable in the tax-averse state Legislature. The plan emerged Tuesday in the Senate Commerce and Tourism Committee when Sen. Nancy Detert, R-Venice, linked the tax bill to two major tax breaks, including one being promoted by Gov. Rick Scott.
While applying the 6 percent sales tax to Internet sales, Detert amended the bill (SB 316) to include a sales tax exemption for manufacturers who are buying equipment — a top priority for Scott — and a reduction in the communication services tax that Floridians pay for their phone, cable and other telecom services.
Detert, who heads the Senate panel, said that rather than look at the measure as either a tax increase or reduction, lawmakers should consider it “tax reform.”
The committee voted 10-1 in favor of the measure, which still has three more scheduled committee stops in the Senate and may face even tougher opposition in the House. Sen. Dorothy Hukill, R-Port Orange, was the only member who opposed it.
“I think this is an idea whose time has finally come,” Detert said.
“It’s really E-fairness. It’s tax fairness.”
Detert’s revised proposal is an attempt to make the bill “revenue neutral.”
Although the bill could generate $400 million or more a year, Detert said the increased revenue should go toward lowering other taxes for businesses and consumers. The increased revenue would be offset by the manufacturers’ tax break, which represents a $141 million savings, and the reduction in the communication services tax, a $151 million savings for consumers.
There is also a provision in the bill that would require the state Department of Revenue to review the Internet tax collections annually and provide lawmakers with a report on the revenue, which Detert said could be used for future tax breaks.
Florida businesses have been pushing for the change in the tax code for the last dozen years, arguing that the traditional “brick and mortar” retailers in the state face a price disadvantage of 6 percent or more — the amount of the sales tax — compared to Internet retailers such as Amazon, which don’t pay the sales tax.
Other companies that sell goods over the Internet but have Florida stores — like Walmart or Sears — already pay the sales tax on their Internet sales.
Sen. Gwen Margolis, D-Miami, who like Detert has advocated for a change in the tax law, said the measure will help Florida’s business community.
“It just puts everybody on an equal footing and besides that I’m tired of seeing empty stores and shopping centers,” Margolis said. “The money is walking away from Florida.”
Randy Miller, a lobbyist for the Florida Retail Federation, said the Florida business community has been calling for a change for more than a decade.
“It’s been a lingering problem. It’s only gotten bigger and bigger,” Miller said. “The face of retailing is changing.”
Miller said the Florida businesses have difficulty competing with the out-of-state retailers because they don’t have to pay the 6 percent state sales, which can be as high as 7.5 percent when local-option taxes are added. “If they match the price, they still cannot compete,” Miller said.
Although the bill is now moving in the Senate, the bigger question remains how the issue will fare in the House.
Miller said he is more optimistic this year because the House Finance and Tax Subcommittee is working on a comprehensive tax reform bill that is expected to include the Internet tax issue as well as tax breaks, such as the manufacturing sales tax exemption.