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Hit delete on Web sales tax exemption
By A Times editorial
Published March 2, 2008
There is no logical reason why sales taxes paid on goods such as sweaters or books bought in Florida stores can be avoided if those same items are purchased by mail order or over the Internet. That gigantic loophole is costing this financially strapped state maybe $2-billion a year in lost revenue, and the Florida Taxation and Budget Reform Commission recommends that the Legislature make it easier to collect that money. Lawmakers ought to make that a top priority this spring.
The commission has recommended that the Legislature revise the state tax code to align it with definitions adopted by 22 other states involved in the Streamlined Sales Tax Project. The goal is to create a more uniform system to make it easier to collect taxes on Internet transactions. This would be a significant step for Florida to recognize an economy that stretches far beyond corner stores and ignores geographic boundaries.
At this point, the project only better positions states to persuade companies to collect sales taxes on Internet purchases. It would take an act of Congress to require the taxes to be collected. But more than 1,100 companies are voluntarily collecting the taxes for states that comply with the streamlining agreement, and Florida needs to be one of them.
Rewriting parts of the tax code to put it in line with those other states will require some changes. For example, some candy bars, juice drinks and ice cream cones that are subject to the Florida sales tax now would become exempt. But orthopedic shoes and crutches sold without a prescription would become taxable. The method of calculating the amount of sales tax on purchases under a dollar also would be adjusted. These are small details compared to the larger benefits.
Over time, this project will raise more state revenue and broaden the sales tax base by making it easier to collect taxes on Internet and mail-order purchases by Floridians from out-of-state companies. But just as significant is fairness - leveling the playing field so that sales from Florida-based stores are not taxed more than those from their competitors.
This is a significant change the Legislature should have tackled long ago instead of mischaracterizing it as a tax increase. Now that the Taxation and Budget Reform Commission is nudging them in the right direction, lawmakers should have enough cover to do the right thing and bring Florida into compliance with the streamlined sales tax agreement.