Tax panel wants a cut from Web

An Internet sales tax could bring $2-billion a year, members say.

By STEVE BOUSQUET, Tallahassee Bureau Chief
Published November 17, 2007

TALLAHASSEE - Florida is losing more than $2-billion a year in revenue from untaxed Internet sales, and a panel of state leaders said Friday it's time the state joined 22 other states and went after that money.

Citing explosive growth in e-commerce, members of the Taxation and Budget Reform Commission endorsed taxing remote sales as a way to tax all sales the same and to expand the tax base at a time when Florida faces serious revenue shortfalls.

"This is not a new tax or changing an exemption," said Julia Johnson, a member of the commission's Finance and Taxation Committee. "This is about collections."

The unanimous vote by eight of the 11 members of the committee was its first foray in the highly controversial arena of changing Florida's tax system. The vote was no more than a consensus to seek the full 25-member commission's support, but it was a start.

A massive chunk of commerce has shifted from retail stores, where most items are taxed, to online, where they are not. A shirt sold in a mall is taxed, but one sold online may not be.

Customers are supposed to pay the sales tax that applies in the state where an item is sent, but most do not though some large retailers now collect the tax voluntarily.

"We feel, from the retail point of view, that it will level the playing field," said Randy Miller, a panel member and a lobbyist for the Florida Retail Federation, which has long pushed for taxing online sales. "It's simply collecting a tax that is already due."

The panel reached a consensus that the tax should be a statutory recommendation to the Legislature - not a proposed constitutional amendment - to avoid mobilizing online merchants in opposition.

Taxing online transactions, known as a streamlined sales tax, is not a new idea, but it has never gotten far in Florida. It could be a tough sell in 2008, an election year for most lawmakers, because of the likelihood that political opponents could portray it as a new tax.

The last major push fizzled in 2004 when then-House Speaker Johnnie Byrd, running as a staunch opponent of taxes in a crowded race for the U.S. Senate, single-handedly blocked a proposal to tax remote sales.

But 22 other states have gone ahead without Florida and have signed an agreement with uniform rules for collecting taxes on Internet sales, such as how to round the amount of tax and what to leave tax-exempt.

It can get complicated. For example, Miller said, Florida exempts orange juice from sales tax only if it is 100 percent juice, but the streamlined sales tax pact only requires that it be 50 percent juice.

The same panel, with clear divisions evident, also backed the concept of compelling the state Legislature to review billions of dollars in business exemptions from the 6 percent statewide sales tax, but stopped short of "sunsetting" or imposing expiration dates for existing exemptions.

Sunsetting is controversial because it would force legislators to take a public vote to preserve sales tax exemptions, some of which may not enjoy support even though they have been on the books for years.

Florida exempts from sales tax a broad array of goods and services such as bottled water, charter fishing boats, courier services, escort services, haircuts and taxicab rides.

The commission is made up of 25 high-powered business and political leaders, and the support for taxing remote sales has long been a priority of Florida's business community.

Though they are supposed to be deliberative and not subject to the passions of the moment, the commission chairman, former House Speaker Allan Bense of Panama City, voiced impatience with the slow progress of the panel's work.

"If there's an idea you want to put forward, the clock is ticking," Bense said.

Steve Bousquet can be reached at bousquet@sptimes.com or (850) 224-7263.