Adding sales tax to online purchases is moving ahead in the U.S. Senate. The issue of taxing internet sales is getting strong support from Republicans and Democrats alike.
The Senate could vote as early as Thursday on a bill to empower states to require online retailers to collect state and local sales taxes for purchases made over the internet. Under the bill, the sales taxes would be sent to the states where a shopper lives.
Under current law, states can only require stores to collect sales taxes if the store has a physical presence in the state. As a result, many online sales are essentially tax-free, giving internet retailers an advantage over brick-and-mortar stores.
CBS Senior Business Analyst Jill Schlesinger tells Seattle’s Morning News it could bring in billions of dollars a year.
“When you look at that actual dollars that are at risk here for both the government, state, local, everyone put together, then we’re talking about billions and billions of dollars. So there’s this nice interesting ground swell of support – maybe the only time we have bipartisan anything right now – where they say, ‘hey let’s go grab that money.'”
Even some normally anti-tax Republicans are on board with this sales tax expansion. It is part of GOP orthodoxy to oppose higher taxes. But supporters of the bill insist it is not a tax increase. Instead, they say, the bill merely provides states with a mechanism to enforce current taxes.
Opponents say the bill would impose complicated regulations on retailers and doesn’t have enough protections for small businesses.
“They really are very worried that this is just a way that they’re going to have to file taxes and do something really different and onerous that would change their bottom line in a significant way,” Schlesinger.
But this move would likely be good news for brick-and-mortar businesses that have been complaining about the online sales tax exemption for years.
“If you walk into the store, what they’ve always said is, ‘It’s not fair. The internet has an unfair advantage over us.’ And that has been a bit true, there’s a point to that, so in a small way this might help those brick-and-mortar stores that have really struggled to compete against the Amazons and the eBays of the world.”
Schlesinger says eBay is really fighting against this bill. Amazon, she says, is likely OK with the idea since it already charges sales taxes.
The bill passed a Senate test vote earlier this week. But it’s expected to have a much harder time in the House.
The Associated Press contributed to this report.