WASHINGTON (AP) — In a move that would be a huge benefit for electrical distributors across the country, the Senate has moved forward with the Marketplace Fairness Act. The bill would allow states to collect sales tax on purchases made over the internet.
The Senate voted 74 to 20 Monday to take up the bill. If that level of support continues, the Senate could pass the bill as early as this week.
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 a big advantage over brick-and-mortar stores.
“We’re happy to see such broad bipartisan support for the marketplace fairness act in the senate and also to have support from the president,” said Ed Orlet of the NAED Government Affairs. “Policymakers understand this is a matter of maintaining a level competitive playing field.”
President Barack Obama supports the bill. His administration says it would help restore needed funding for education, police and firefighters, roads and bridges and health care.
But the bill’s fate is uncertain in the House, where some Republicans regard it as a tax increase. Heritage Action for America, the activist arm of the conservative Heritage Foundation, opposes the bill and will count the vote in its legislative scorecard.
“It is going to make online businesses the tax collectors for the nation,” said Sen. Kelly Ayotte, R-N.H. “It really tramples on the decision New Hampshire has made not to have a sales tax.”
Many of the nation’s governors — Republicans and Democrats — have been lobbying the federal government for years for the authority to collect sales taxes from online sales, said Dan Crippen, executive director of the National Governors Association. Those efforts intensified when state tax revenues took a hit from the recession and the slow economic recovery.
“It’s a matter of equity for businesses,” Crippen said. “It’s a matter of revenue for states.”
The issue is getting bigger for states as more people make purchases online. Last year, Internet sales in the U.S. totaled $226 billion, up nearly 16 percent from the previous year, according to Commerce Department estimates.
Copyright Associated Press 2013
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