Internet sales tax bill filed | Arkansas Blog

Thursday, March 3, 2011

Internet sales tax bill filed

Posted By on Thu, Mar 3, 2011 at 12:20 PM

At last, the bill to level the playing field between Arkansas-based retailers and on-line merchants has been introduced.

It's called Main Street Fairness legislation. You could also call it a tax increase on many on-line shoppers. But it is nothing but the right thing to do. As the group behind Sen. Jake Files' SB 738 explains:

Legislation introduced in the Arkansas Senate will work to close a massive loophole in current tax law that allows large out of state online-only retailers to avoid collecting sales taxes. This puts Arkansas small businesses—those that collect sales taxes—at a competitive disadvantage.

The current loophole allows two companies selling similar products to have different sales tax collection responsibilities. It requires Arkansas brick-and-mortar businesses to collect and remit sales taxes while out of state online-only retailers are not required to collect sales taxes nor are they required to notify consumers that they must still pay sales taxes (known as use tax) when they file their income taxes each year.

The group will say this bill only guarantees collection of tax already owed. But, really. If you buy a book on-line from Amazon you are not going to report the use tax due and the state isn't going to attempt to collect it. With this legislation, the taxes can be collected. It's only fair to in-state businesses. The state can also use the money. I suspect the move to Internet commerce has been a significant factor in erosion of the state sales tax base. But it creates interesting politics.

Many of the businesses behind this bill (Walmart will be among them, if not part of the so-called Main Street coalition) are the types of enterprises that often enjoy wide Republican support — and vice versa. But tax increases are poison to this group of legislators. As artful as the spin is — and as meritorious as the argument is — you can't get around the fact that the bill will allow collection of some tax money from people not now paying it.

Here's website for a national group with shared aims. Backers here include the Arkansas Grocers and Retail Merchants Association.

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