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A Times Editorial

Close Internet sales tax loophole

The bookstore chain Borders did not cite Florida's outdated sales tax law last week when it announced it would shutter four of five Tampa Bay stores as it enters Chapter 11 bankruptcy proceedings. But the competitive disadvantage for the state's retailers that the Florida Legislature refuses to address is at least partially to blame. As long as Internet-only sellers such as can get away with not collecting state sales tax and effectively sell their products for at least 6 percent less, Florida merchants pay the price. It's past time for lawmakers to work toward a level playing field.

Hollow campaign rhetoric and intellectual dishonesty are to blame for this fundamental unfairness that easily could be addressed. Florida's Republican leaders, afraid of being accused of raising taxes, have refused repeatedly to act even as some of their biggest allies — the Florida Chamber of Commerce, Associated Industries of Florida and Florida Retail Association — and the respected nonpartisan fiscal watchdog Florida TaxWatch have begged them to do something.

Those groups recognize reality: The status quo undercuts Florida commerce in multiple ways. In-state retailers' see their prices undercut by Internet-only suppliers, costing them business. That drives down their need to hire employees. It also costs state and local governments billions annually in lost tax revenue, meaning fewer resources to staff everything from schools to prisons.

A University of Tennessee study estimates Florida will lose at least $2.4 billion in revenue this year due to Internet sales where no tax is collected. That's roughly two-thirds of the state's $3.6 billion deficit. Yet neither Gov. Rick Scott nor anyone in legislative leadership shows any interest in addressing this enormous loophole. Step 1 would be joining the Streamlined Sales Tax Governing Board, a consortium of 23 states representing nearly a third of the country's population that is working to pressure Congress to embrace a nationwide compliance system for Internet merchants.

The members agree to align their tax policies to make it easier for retailers to voluntarily comply across state lines. And while Florida would face some upfront costs, the ultimate payoff — a sales and use tax that fairly captures all transactions in the state — would more than compensate for the initial minor expense and inconvenience.

Even a fair sales tax policy in Florida might not have saved Borders' four Tampa Bay locations or the jobs of the company's local employees. But it most surely contributed to the retail stores' demise. How is that good for Florida's workers or its economy?

Close Internet sales tax loophole 02/19/11 [Last modified: Saturday, February 19, 2011 6:19pm]
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