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Editorial: Charge sales tax on Internet sales

 
With Black Friday and Cyber Monday looming, it’s time to remind members of Congress and the Legislature who talk big about promoting small businesses to back up their words with action.
With Black Friday and Cyber Monday looming, it’s time to remind members of Congress and the Legislature who talk big about promoting small businesses to back up their words with action.
Published Nov. 25, 2015

The announcement that Airbnb will start collecting state and county taxes in December is welcome news for Tampa Bay and the state. It will make Florida the fourth and largest state to charge taxes on those rentals, and it will resolve a basic fairness issue in the tourist industry. Congress and the Florida Legislature should take the concept of a level playing field even further and require sales taxes to be collected on all online sales.

Airbnb is an online market for rental lodging that enables people to list their homes or apartments, or book a place to stay in thousands of cities. But like most online businesses that have no physical presence in Florida, the company has not been paying state sales taxes or the local resort taxes collected on hotel rooms. That gave Airbnb a competitive advantage over hotels, effectively creating a 12 percent discount in Pinellas County. That is fundamentally unfair, and in this digital age there is no reason that online companies should avoid paying these taxes that their brick-and-mortar competitors pay.

With Black Friday and Cyber Monday looming, it's time to remind members of Congress and the Legislature who talk big about promoting small businesses to back up their words with action. Most Floridians are paying their fair share of what it costs to run schools, parks and other government functions. Yet they are able to avoid paying sales taxes when they shop at many online sites that are direct competitors to the Main Street businesses who have to collect the tax.

Last year's holiday season was the first that Floridians shopping on Amazon.com were consistently being charged the state's sales tax on their purchases. Amazon fought collecting the tax for years, but it was forced to change course and comply with the sales tax collection policies after it opened giant warehouses in Lakeland and Ruskin to establish a physical presence in the state.

Yet the lost sales tax revenue from e-commerce still could amount to roughly $500 million for the state each year. Florida should demand that more online sellers collect and remit sales taxes when their goods are shipped to an address in this state. Legislators could join other states that have passed laws that define Internet sellers that pay an in-state affiliate to refer customers to them as in-state businesses. More broadly, Congress should change the interstate commerce rules. The U.S. Senate approved legislation two years ago that would have required companies with revenue of at least $1 million to submit sales tax collections to states, but House Republicans refused to act because they claimed it would be a tax increase.

When the purchase of many goods goes untaxed, that shifts the cost of government to everyone else. Collecting sales taxes on more Internet sales is a fundamental fairness issue. Shopping patterns are shifting, and consumers routinely use the Internet to check prices and look for deals on their smartphones even as they examine merchandise in stores. It's time to change tax policy to better reflect business patterns.

That is exactly the type of change that will be made next month in a key portion of the lodging industry as Airbnb starts collecting sales and resort taxes. There is no reason why lawmakers in Tallahassee and Congress should not level the playing field in other areas as well.