Scott agrees lack of online tax collection not fair, but has no plans to change system

November 29, 2011 | | Print Print

By David Royse

On the day millions of holiday shoppers were being encouraged to hit up online retailers, Gov. Rick Scott acknowledged it isn’t fair that most people don’t pay Florida taxes on those purchases — but said he doesn’t want to do anything that would change that because he doesn’t want to “take more money out of the private sector.”

Scott made his remarks during an interview with the editorial board at the Daytona Beach News-Journal on Monday, the day billed by online retailers as “Cyber Monday,” a promotion aimed at getting people to make holiday gift purchases online.

His statement on the issue also comes as some lawmakers– pushed by brick-and-mortar retailers — seek to make it easier for Florida to collect taxes for online sales from out-of-state companies. Several big and small business organizations support doing more to collect the tax, including the Florida Retail Federation and the Florida Chamber of Commerce, which says collection of sales tax on online purchases could bring the state as much as $2 billion a year.

“The out-of-state merchant not only doesn’t collect or pay taxes in Florida, but uses this fact to gain a price advantage through being able to sell an item at a lower cost simply because he or she doesn’t collect the tax due on the sale,” the Florida Retail Federation said in an issue paper on the topic.

The Republican controlled Legislature has declined to take up the discrepancy in the past — largely because of arguments like that made by Scott — that it amounts to a tax increase on people who make online purchases. Backers of the idea, however, say the sales tax should already be collected — sales of most items by people in Florida are supposed to be subject to tax — and that to collect the revenue would simply be closing a loophole.

U.S. courts, including the Supreme Court, have said that disparate state sales tax systems make it an undue burden on retailers to have to collect taxes for purchases by people in other states.

Scott acknowledged in his editorial board interview that it isn’t fair to non-online retailers that they have to collect the tax while online retailers don’t.

“It’s not fair. You shouldn’t be treated differently, whether you’re selling online or in bricks-and-mortar — that’s not fair,” Scott said. “But, at the same time, my focus is not to do it where we raise taxes. I don’t want to take money out of the private sector.

“Is it raising taxes to have a mechanism that helps Florida collect the sales taxes we’re already supposed to pay?” Scott continued. “If it’s out of your pocket, that’s a tax.”

Rep. Michelle Rehwinkel Vasilinda, D-Tallahassee, is carrying the bill (HB 321) in the House this year that would simplify the state’s sales tax system in an effort to qualify Florida for participation in a national compact aimed at making it easier for businesses to voluntarily collect and remit taxes from out-of-state purchases.

“Millions of dollars flow from Florida to out-of-state online retailers who don’t employ a single Floridian or pay any property taxes,” Rehwinkel Vasilinda said in a statement this week promoting her bill. “These out-of-state retailers are given an unfair and growing competitive advantage over responsible Florida businesses.”

Sen. Evelyn Lynn, R-Ormond Beach, is carrying the Senate version of the bill (SB 430).

Rehwinkel Vasilinda said the proposals would help local businesses create jobs — and noted the Internet, where retailers have reported double-digit increases in sales in recent years — isn’t going away.

“We live and do business in a 21st century economy. It is time Florida had a 21st century tax code,” she said.

Neither the House bill nor its Senate companion has been scheduled for a committee hearing yet this year.

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