The question for Gov. Rick Scott and Florida legislators: When will they stop supporting an extraordinary tax break for out-of-state companies that undercuts Florida jobs? More than a decade after Amazon.com and other Internet retailers burst onto the scene, Florida — unlike dozens of other states — has yet to take a single step toward leveling the playing field for in-state retailers when it comes to collecting sales taxes. The 2013 legislative session should be different.
Across the country, the pressure has been growing on Internet-only retailers — particularly behemoth Amazon — to collect sales taxes. In Florida, the lost sales tax revenue is estimated to be at least $454 million annually. That's nearly enough to pay for the governor's proposal to give each public school teacher a $2,500 raise next year.
But when Scott unveiled his 2013-14 budget proposal last week, an Internet sales tax was not mentioned. Instead, the governor focused on a pair of small-bore tax breaks for businesses — including a recurring $115 million break for manufacturers and another tweak to the corporate income tax code. "We want more manufacturers to move to Florida," he said. Does he not care that in-state retailers are at a competitive disadvantage?
Internet-only retailers have benefitted from a 1992 U.S. Supreme Court opinion — written before e-commerce existed — stating that companies without a bricks-and-mortar presence in a state need not collect taxes on sales in that state. And the ideal solution remains congressional action. For more than a dozen years, the Streamlined Sales Tax group of states, now totaling 24, has worked to unify state sales tax codes to set the stage for just such a national collection requirement — only to be outmaneuvered by e-commerce lobbying efforts in Washington.
But 15 states, fed up with waiting on Congress and giving carpetbaggers a break, have passed legislation or made deals that require Amazon to collect sales taxes now or in the future, including California, Texas and New York. Many of those efforts initially focused on expanding the definition of in-state businesses to include marketing affiliates of e-commerce retailers. The political maneuvers often resulted in Amazon establishing a physical presence in the state and agreeing to collect sales tax. For example, Amazon agreed to build two warehouses in California following political pressure but also as its business strategy shifts to offer quicker deliveries in urban markets.
Last year, a Florida Senate committee that included Senate President Don Gaetz passed a bill that would have required sales tax collection if an e-retailer had Florida affiliates. The bill, which was never heard again, included a revenue-neutral provision. That's not ideal in a state that still struggles to pay for education and other priorities, but it would make the tax code fairer. House Speaker Will Weatherford told the Tampa Bay Times editorial board on Friday that he is open to such a bill.
But endorsing an idea and making it happen are two different things in Tallahassee. Neither legislative leaders nor the governor have made an Internet sales tax a priority even as Florida's 250,000 retailers clamor for it and carpetbaggers continue to benefit from the Florida market without contributing to it. It's past time to level the playing field for Florida jobs.