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A Times Editorial

Florida's unfair tax

Odds are thousands of Florida families found a Microsoft Xbox, Nintendo Wii or Sony PlayStation under their Christmas tree and gave no thought to tax policy when they started playing Guitar Hero. But there is a fundamental fairness issue at stake: The game consoles start at around $250, and Floridians who bought one at a local store or chain paid at least $15 in sales tax. The families who bought from an Internet-only store, such as through Amazon.com, paid no tax at all.

That's not fair. It also is particularly bad tax policy in a state where the 6-cent sales tax produces nearly one of every three dollars spent on state government. The economic crisis should prompt the Florida Legislature when it meets in special session Jan. 5 to start correcting a situation that has cost the state billions of dollars.

Strictly speaking, outdated interstate commerce laws prohibit states from enforcing their sales tax across state lines. Sales tax is collected on goods purchased in Florida from bricks-and-mortar retailers or their online counterparts. But the tax is not automatically collected on goods purchased from online retailers with no physical presence. How much states are losing in sales tax due to Internet sales isn't known, but economists believe it's growing along with Internet sales. A 2004 University of Tennessee study estimated that uncollected sales taxes from online retail would cost Florida between $824.2-million and $1.2-billion annually by 2008.

The Internet has rewritten America's shopping patterns, and legislators should rewrite tax law to reflect those changes — and there is a way for the states to improve voluntary compliance. So far, 22 states have joined the Streamlined Sales and Use Tax Agreement. The group's goal is to press Congress to establish a national system to collect sales taxes across state lines. But the member states also rewrite their tax codes, using common language to facilitate collection of Internet sales taxes now by online retailers. Florida is burying its head in the sand, exacerbating the unfairness of the current system and losing money by failing to join the effort.

The few Florida politicians who have pushed to join the group over the past several years have been thwarted by Tallahassee's knee-jerk philosophy that any tax reform amounts to a new tax. This isn't about creating a new tax. In fact, the law requires any Floridian buying goods online from a non-Florida retailer to pay their sales tax directly to the state Department of Revenue. But almost nobody does, and the law is considered unenforceable.

So the family who bought the Microsoft Xbox console locally, such as at St. Petersburg's Best Buy or at the store's online site, paid 6 percent sales tax plus a 1 percent local option sales tax. They shouldered an uneven burden of paying for our schools, prisons and safety net.

Online customers, driven by price or convenience, might not see it this way. Shipping costs can often eat up savings on Internet sales, for example. But by collecting sales tax from one retailer but not another, the government is subsidizing online retailers to the detriment of local employers. It is subsidizing one method of consumption over another — penalizing consumers who may not shop on the Internet.

There is a precedent for straightening this out. The same unfairness used to be true of Florida's telecommunications taxes: Cable television subscribers paid more than satellite TV customers; land line phone users had higher taxes than mobile phone customers. But the Legislature simplified the communications services taxes in 2001 so customers would be taxed equitably regardless of the technology they chose.

It's time to do the same for Florida's sales tax, particularly in light of the state's current budget crisis. Joining the multistate compact won't mean quick returns. It won't dig Florida out of its current economic hole by itself because it can't be enacted quickly enough. But it would broaden the tax base, reflect changing shopping patterns and soon raise billions that are badly needed for education, social services and other needs. All consumers would pay regardless of how they shopped — and that would be only fair.

Same console, different tax

Microsoft Xbox 360 Pro Console System

Best Buy, St. Petersburg

$299.99 price, plus …

$21 sales tax

BuyNow Incorporated via Amazon.com

$299.99 price, plus …

$0 sales tax

Same book, different tax

Just After Sunset by Stephen King

Barnes and Noble, Clearwater

$19.60 price, plus …

$1.37 sales tax

Amazon.com

$16.80 price, plus …

$0 sales tax

Same filter, different tax

Filtrete Ultra Allergen Reduction Filter 16 x 20 x 1

Home Depot, St. Petersburg

Price for six filters:

$95.82 price, plus …

$6.71 sales tax

Amazon.com

Price for six filters:

$93.49 price, plus …

$0 sales tax

Same shirts, different tax


Hanes Men's 3-pack Tagless T-shirt

Target, St. Petersburg

$9.99 price plus …

$0.70 sales tax

Sold by anmolbeauty through Amazon.com

$11.99 price plus …

$0 sales tax

Same diaper, different tax

Pampers Swaddlers, newborn size

Publix, St. Petersburg

Price for 60-count pack

$14.99 plus …

$1.05 sales tax

Diapers.com

Price for 92-count pack

$20.99 plus …

$0 sales tax



Same vacuum, different tax

Dirt Devil Kone handheld vacuum cleaner

Target, St. Petersburg

$29.99price, plus …

$2.10 sales tax

Amazon.com

$30.51 price, plus …

$0 sales tax

Same shoes, different tax

Converse Chuck Taylor high-top sneakers

Finish Line, St. Petersburg

$39.99 price, plus …

$2.80 sales tax

Zappos.com

$41.95 price, plus …

$0 sales tax





Florida collects sales tax on goods when they are purchased from retailers in the state. Buy those same items online, and the sales tax often goes uncollected. That's not fair to Florida businesses or their customers, and it costs the state billions of dollars in tax revenue.


Florida's unfair tax 12/27/08 [Last modified: Monday, January 5, 2009 1:31pm]

    

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