State sales tax could be collected on Internet purchases
MILWAUKEE- If a consumer is given a choice to buy a piece of jewelery from a local jeweler and pay sales tax on it, or go online and buy the same piece of jewelery without having to pay that tax -- where do you think more consumers will shop?
The Journal Sentinel reports that state sales tax receipts haven't kept up with the growth of online retailing over the last decade, as a Supreme Court decision from the early 1990s has made it difficult to collect the taxes due -- a situation that cost Wisconsin an estimated $157 million in revenue last year alone.
That type of problem has prompted the nation's governors to ask Congress to help states recover an estimated $20 billion in sales taxes that go uncollected by out-of-state online merchants every year.
To Scott Stenger of the Alliance of Wisconsin Retailers,"It's about jobs; Wisconsin jobs; Wisconsin families that benefit from those jobs."
Stenger joined Newsradio 620 WTMJ's "Wisconsin's Afternoon News with John Mercure" to voice his support for that proposed legislation.
"It's about simple fairness and not having government picking winners and losers," said Stenger.
Stenger is referring to what many perceive as a loophole in the tax law, which allows online retailers that don't have a distribution center in that particular state to refrain from charging sales tax on Internet purchases.
For instance, purchasing a $100 necklace at a jewelery store in Milwaukee County would force you to pay a 5.6% sales tax on top of the $100. If you buy that necklace from an online retailer that doesn't charge sales tax -- the consumer saves $5.60 by shopping online.
Stenger believes that loophole gives out-of-state businesses and online retailers an unfair advantage over local merchants. He wants legislation to "put local merchants and online retailers on an equal playing field."
Speaking on behalf of the National Governors Association, Tennessee Gov. Bill Haslam told the House Judiciary Committee on Tuesday it isn't fair to local businesses that online sellers are not required to collect and distribute state sales taxes for purchases made where they don't have a physical presence.
In states with sales tax, online buyers are required to pay a "use tax" for items upon which no sales tax has been paid, but often sellers don't enforce it or buyers are not aware of the requirement.
"This discussion isn't about raising taxes or adding new taxes," Haslam said. "This is about states having the flexibility and authority to collect taxes that are already owed by their own in-state residents."