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House Speaker Boehner unlikely to support Internet sales tax bill

Boehner's comments and others signal that momentum from easy passage of the sales tax bill in the Senate won't lead to quick House action on the issue.

May 07, 2013|By Jim Puzzanghera, Los Angeles Times
  • House Speaker Boehner (R-Ohio) said Tuesday that the Internet sales tax legislation would impose too much of a burden on small Internet retailers.
House Speaker Boehner (R-Ohio) said Tuesday that the Internet sales tax… (Andrew Harrer, Bloomberg )

WASHINGTON — House Speaker John A. Boehner said he probably won't support legislation allowing states to require that larger retailers collect sales taxes on Internet purchases.

And a key House committee chairman said his panel would take a "more thoughtful" approach to the bill, which passed the Senate overwhelmingly Monday.

The comments signaled that momentum from Monday's easy passage of the bill in the Senate won't lead to quick House action on the controversial issue.

Boehner (R-Ohio) said Tuesday that the legislation would impose too much of a burden on small Internet retailers.

"I just think that moving this bill where you've got 50 different [state] sales tax codes, it's a mess out there," he told Bloomberg Television. "And what you're doing is you're going to make it much more difficult for online retailers to be able to comply."

Boehner did not commit to a position, saying the House Judiciary Committee would look at the issue.

Rep. Robert W. Goodlatte (R-Va.), who chairs the committee, said Monday night that he had problems with the proposed Marketplace Fairness Act, and he criticized the Senate for bypassing the committee process by taking the bill straight to the floor.

Supporters of the legislation, who have been working years on the issue, said the bill was stalled in the Senate Finance Committee and that it was time to address the problem faced by conventional retailers. Those retailers have argued that they must compete against online merchants who do not have to charge sales tax.

Senate Finance Committee Chairman Max Baucus (D-Mont.) comes from a state that does not have a sales tax, and he opposed the bill.

Of the 10 senators from such states — including Delaware, New Hampshire and Oregon, as well as Alaska, which has no state sales tax but allows local sales levies — seven voted against the bill.

Those senators argued it was unfair to require retailers in their states to collect sales taxes for other states, but their opposition couldn't stop the bill. The Senate voted 69 to 24 to approve it, as 46 Democrats joined with 21 Republicans and two independents.

House supporters of the legislation hoped that the strong bipartisan support would push the bill forward in their chamber. They have been trying to counter arguments by some anti-tax advocates that the legislation amounts to a tax increase.

Consumers in states with sales tax are obligated to pay it on their Internet purchases if the retailer doesn't collect it, but only about 1% of online shoppers do.

"Let's not wait until more businesses go under because of unfair online competition," said Rep. Jackie Speier (D-Hillsborough), one of the main sponsors of the bipartisan House bill. "This is not a new tax; the technology is there, and it is time for the House to act."

Goodlatte said he understands that conventional retailers are concerned about competing against Internet sellers who do not have to collect sales tax. But he said the bill needs to simplify the process for collecting sales tax for hundreds of jurisdictions and then remitting payments.

Goodlatte also echoed concerns of some conservative opponents of the bill that it could set a precedent for states to collect other taxes, such as income or business-use levies, from people or companies outside their borders.

"I am open to considering legislation concerning this topic, but these issues, along with others, would certainly have to be addressed," Goodlatte said.

The legislation would override a 1992 Supreme Court decision that prevented states from collecting sales taxes from companies with no in-state presence.

California and some other states have begun expanding the definition of an in-state presence so they could begin collecting sales tax from some large online retailers, notably Amazon.com Inc.

The Senate bill would allow states to require larger retailers with no in-state presence to collect taxes on sales to residents. Companies would be exempt if they have less than $1 million annually in out-of-state online and other so-called remote sales, such as catalog and mail-order business.

jim.puzzanghera@latimes.com

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