Friday, May 25, 2018
Business

Internet sales tax issue gains steam in Florida Legislature

The cost of buying items on Amazon could rise if the Florida Legislature passes a bill that would require out-of-state online retailers to collect sales tax.

For more than a decade, Florida retail leaders have tried unsuccessfully to level the playing field for brick-and-mortar retailers who struggle to compete on price. As this year's Legislative session opens Tuesday, they believe they have more support.

"There really hasn't been a year when we've had all the entities saying the same thing," said John Fleming, a spokesman for the Florida Retail Federation. "There's a recognition that it's time to do something."

The stakes have never been higher, as more people look to the Internet to make purchases and comparison shop. Online sales grew 15 percent nationwide last year compared with less than 5 percent for traditional retail sales. Amazon, the largest retailer of online goods, finished 2012 with $61 billion in sales, compared with $5.3 billion a decade ago.

Economists estimate Florida loses $454 million a year in sales tax revenue on goods bought from Internet-only vendors — a number some say could be considerably lower or as high as $1.5 billion. Overall, the state collected more than $17 billion in sales tax during fiscal year 2011-2012.

The state requires retailers that are physically located in Florida, such as Best Buy and Target, to collect sales tax, even if the item is purchased online. Stores without a brick-and-mortar presence don't have to pay the tax, resulting in a 7 percent savings to customers in Hillsborough, Pinellas and Pasco counties, 6.5 percent in Hernando and 6 percent in Citrus. Florida residents, for instance, don't pay sales tax on many purchases from Seattle-based Amazon.

"There is a basic fairness issue here," said Jerry Custin, president and CEO of the Upper Tampa Bay Chamber of Commerce, based in Oldsmar. "It puts the retail guy in your community at a disadvantage. In addition to what they already do to have a brick-and-mortar business, they also have to pay sales tax."

While lawmakers appear united on the fairness issue, there's less agreement on how the additional revenue would be spent. The legislation (Senate Bill 316 and House Bill 497) includes a revenue-neutral provision that would mean no new tax money for state government. Rather than count the revenue as money for education, health care, roads and other basic needs, the Department of Revenue would track the amount collected from out-of-state online retailers and return the amount to taxpayers.

The bill, which if passed would take effect July 1, stipulates the money would be used to reduce taxes, including giving breaks to manufacturers buying equipment. Florida, which has no personal income tax, relies on sales tax for more than 70 percent of its annual revenue.

Some supporters of the legislation have said the revenue debate, while important, is secondary to resolving the equity issue and collecting what is owed to the state. Florida law requires residents to pay sales tax on purchases made over the Internet, but few do, and there's no enforcement. Many people aren't even aware of the rule.

Last year, a Florida Senate committee approved a similar e-commerce bill, but it died in the House. Republican lawmakers committed to not raising taxes said it amounted to a new tax. It also contradicted a 1992 U.S. Supreme Court ruling that a state can't require remote retailers without a physical presence to collect sales tax in that state.

Senate President Don Gaetz said last week the latest bill by Sen. Nancy Detert, R-Venice, is an improvement over last year's, which would have used the Internet sales tax money to cover tax cuts for businesses. He has reservations about designating the money for manufacturers purchasing machinery and equipment.

"If you are going to make it revenue neutral, it can't just be revenue neutral in the books of the state," he said. "Corporations that buy manufacturing equipment don't buy shirts on the Internet. So the people for whom you would collect the Internet sales tax should be the people that you give a tax reduction to if you're going to truly make it revenue neutral."

Gaetz was unsure how far the issue would get in the legislative session ending May 3. Philosophically, some lawmakers remained opposed to collecting the tax.

"If I didn't pay it before and I have to pay it now, I think it's a tax increase," he said.

Retailers see the legislation as a way to boost the state's economy. Stores that now lose business to out-of-state online retailers would generate more sales and, therefore, be in a better position to expand. For every $1 million in new retail sales, traditional stores create four times as many jobs as Amazon, according to a 2011 study by the University of Tennessee.

"It's not really fair to have a mandated tax be the competitive edge" for out-of-state competitors, said Kane Morris-Webster, the government relations chairwoman for the International Council of Shopping Centers representing Florida. "The brick-and-mortar retailers are the ones supplying the jobs. They are contributing to the state."

The shopping center group representing 4,000 members in Florida supports the revenue-neutral provision as a means to secure the bill's ultimate passage. It would like to see the online sales tax collections used to offset the sales tax money now generated by commercial leases.

The ICSC is pushing legislation to eliminate the longstanding sales tax charged on every commercial lease. The bill (656 in the Senate and 629 in the House) would phase out the tax by 2019.

Supporters say ending the tax, which generates an average $1.2 billion a year, would give retailers more money to invest in their businesses and offer out-of-state companies greater incentive to move here. Florida is the only state in the country to collect such a tax.

Business leaders have tried for years to end the tax but, in tough financial times, gained little support. This year, they hope the state's budget surplus could change lawmakers' minds.

Both sales tax bills — e-commerce and commercial leases — would require approval by the full House and Senate before going to the desk of Gov. Rick Scott. Scott made no mention of either when unveiling his 2013-2014 budget proposal. Instead, he recommended expanding the sales tax exemption for manufacturers buying machinery, a move that would save $115 million a year in state sales tax.

Nonetheless, business leaders are confident Scott would back a revenue-neutral e-commerce bill.

"He knows what it's like to be in a competitive marketplace, and this is ultimately going to create more Florida jobs," said Fleming of the Florida Retail Federation. "The situation now is the worse-case scenario. We're allowing the sales to go to outside companies, and we're not collecting any taxes on it."

Florida's legislative efforts coincide with what's happening at the federal level. In February, lawmakers in Washington, D.C., introduced the Marketplace Fairness Act, which would give states the authority to require out-of-state retailers to collect sales tax.

So far, 24 states have passed legislation to simplify the collection process as would be mandated by the Fairness Act. Other states such as California and New Jersey have cut deals with Amazon requiring the online retailer to create a physical presence — like a warehouse or distribution center — in exchange for a delay in collecting the sales tax or tax incentives.

Amazon has no immediate plans to open a distribution center in Florida, although it's not of out of the question as the company looks to expand its next-day delivery service.

Times/Herald staff writer Toluse Olorunnipa contributed to this report. Susan Thurston can be reached at [email protected] or (813) 225-3110.

Comments
Five members of 69ers motorcycle gang indicted on federal charges

Five members of 69ers motorcycle gang indicted on federal charges

Last year three members of the 69ers Motorcycle Club gang were implicated in the execution of a rival gang leader in the middle of rush hour traffic in Pasco County.Now those three and two other 69ers members have been indicted on federal charges tha...
Updated: 8 hours ago
With makeover, ZooTampa at Lowry Park takes a page from the theme parks

With makeover, ZooTampa at Lowry Park takes a page from the theme parks

TAMPA — Behind the construction walls near the carousel at ZooTampa at Lowry Park, hammers, saws and power drills made a racket in the blazing Friday heat. A raft full of 100-pound water jugs took test trips on the new Roaring Springs ride set ...
Updated: 9 hours ago
U.S. news outlets block European readers over new privacy rules

U.S. news outlets block European readers over new privacy rules

LONDON ó U.S. news outlets including The Chicago Tribune, The Los Angeles Times, The Orlando Sentinel and The Arizona Daily Star abruptly blocked access to their websites from Europe on Friday, choosing to black out readers rather than comply with a ...
Published: 05/25/18
Tampa Electric appeals OSHA findings for October accident

Tampa Electric appeals OSHA findings for October accident

TAMPA ó Tampa Electric Co. is appealing a recent citation by federal regulators. The Occupational Safety and Health Administration hit the utility with a $76,050 fine and a "serious" violation in April following its investigation into an accident in ...
Published: 05/25/18
Fiat Chrysler recalls 4.8 million cars, warning owners: Donít use the cruise control

Fiat Chrysler recalls 4.8 million cars, warning owners: Donít use the cruise control

Associated PressDETROIT ó Fiat Chrysler is recalling 4.8 million vehicles in the U.S. because in rare but terrifying circumstances, drivers may not be able to turn off the cruise control. The company is warning owners not to use cruise control until...
Published: 05/25/18
Federal Reserve chairman warns his agency must be free from political pressure

Federal Reserve chairman warns his agency must be free from political pressure

Associated PressFederal Reserve Chairman Jerome Powell warned Friday that the Fedís independence from political pressure must be respected if it is to succeed in controlling inflation, maximizing employment and regulating the financial system. His re...
Published: 05/25/18
Restaurants like Ford’s Garage use the experience to get you in the door

Restaurants like Ford’s Garage use the experience to get you in the door

Tim Butler’s first car was a Ford Model A pick-up truck — a pearl fawn and cherry red pick-up he got his senior year in high school from his dad, who renovates antique cars. That’s why as Butler waited for a table at the Ford’...
Published: 05/25/18
St. Petersburg man fined $507,513 in penny stock scheme

St. Petersburg man fined $507,513 in penny stock scheme

TAMPA ó A St. Petersburg man was fined $507,513 and permanently barred from participating in the offering of a penny stock in a case involving a scheme to manipulate the price of Aureus, a penny stock company incorporated in Nevada, officials said Fr...
Published: 05/25/18
Broadcomís CEO tops highest-paid list with a $103 million payout

Broadcomís CEO tops highest-paid list with a $103 million payout

Times staff and wiresNEW YORK ó Chief executives at the biggest public companies got an 8.5 percent raise last year, bringing the median pay package for CEOs to $11.7 million. Across the S&P 500, compensation for CEOs is often hundreds of times highe...
Published: 05/25/18
Denis Phillips, hurricane season guru, talks his signature beer, suspenders and Rule #7

Denis Phillips, hurricane season guru, talks his signature beer, suspenders and Rule #7

SAFETY HARBOR ó Denis Phillips cracks a pop-top and pulls a can that looks a lot like him to his lips."Itís got that citrusy feel to it," he says. "Which is a Florida thing. Thatís not bad." Indeed, thereís a grapefruit finish to Rule #7 Hurricane Sa...
Published: 05/25/18