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Byrd's tax scruples hold back support for Internet income

Published April 2, 2003

TALLAHASSEE - House Speaker Johnnie Byrd's fierce opposition to any and all tax increases is blocking the biggest goal of the Florida business community - applying the sales tax to the Internet.

Businesses say they want to end a disparity that puts Florida retailers at a competitive disadvantage.

A Florida resident who buys a book at Barnes & Noble must pay sales tax of at least 6 percent. But the same consumer who buys the same book on pays no tax. Internet, catalog and TV sales, known as remote sales, are taxed only when a business has a Florida presence.

Internet sales are growing fast. Experts say Florida, which relies on sales tax revenue more than almost any other state, could have raised $932-million on Internet sales last year, and $3-billion by 2006.

"It's an evasion of Florida taxes. That is not fair to Florida consumers," said Rick McAllister of the Florida Retail Federation in testimony to a Senate committee. "This is not a new tax. This is not a tax on the Internet. It's a question of fairness."

That puts Byrd, a Republican, at odds with one of the party's most loyal bases of support, big business. And it comes as the Senate is looking for ways to avoid deep budget cuts, such as expanded gambling or removing sales tax exemptions.

A bill is progressing in the Senate (SB 1776) with bipartisan support, but no bill exists in the House, and the session reaches the midway point today.

The drive in Florida to tax remote sales is the start of a national movement to persuade Congress to write federal legislation to overturn a U.S. Supreme Court decision that prohibits such taxes.

Congress has asked that 10 states and 20 percent of the population agree before it acts. So far seven states representing 8 percent of the population have joined the project.

The largest state to join the pact is North Carolina. Business lobbyists say Florida, the nation's fourth-largest state, needs to join quickly so it can influence the debate, and the final agreement.

"We need to be the 800-pound gorilla at the table," said Randy Miller, a lobbyist for retailers.

Byrd is skeptical. "I haven't figured out why Florida should join that club yet," he said.

"I haven't figured out yet why we have to raise taxes in order to collect this thing - why it costs money to collect money," Byrd said recently. "I haven't quite figured out how paying more taxes leads to anything."

Groups pushing the tax include Associated Industries of Florida, retailers, restaurants, car dealers, public accountants, convenience stores, petroleum marketers, the Florida Chamber of Commerce, school boards and cities.

Rep. J. Dudley Goodlette, R-Naples, the House policy chairman, said Tuesday he hopes the House will consider a version of the issue this session. One possibility, Goodlette said, is to link remote sales taxes to a drop in the statewide 6 percent sales tax.

McAllister said business lobbyists are "mystified" by Byrd's position because there is no organized opposition to the idea. "There's nobody on the other side," McAllister said.

Gov. Jeb Bush has not taken a public stand on the issue.

Rep. Nancy Detert, R-Venice, chairwoman of the House Commerce Committee, said she supports the concept, but her committee discussed it Monday without taking a vote.

"It sounds like something I could support," Detert said. "I certainly prefer that to gambling to float our boat."

[Last modified April 2, 2003, 02:03:29]

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