Wayne Harper, a Utah state senator and president of the Streamlined Sales Tax project’s governing board, told the Associated Taxpayers of Idaho conference this morning that the move in Congress to enable states to collect sales tax on online sales doesn’t mean a tax increase. “It’s being labeled as a tax increase, a new tax. It’s not,” he said. “It’s just a collection method for the states.” He noted that various states are planning for corresponding tax cuts if they get the opportunity to directly collect sales tax on online purchases; in Idaho, those taxes already are due and payable by law, but people are supposed to self-report them and pay them on their state income tax returns, which few do.
Harper said he sponsored a bill in Utah saying if that state gets to collect the taxes directly, it’ll put them all in a restricted account, and use them to reduce the state’s general sales tax, “so it’ll be revenue neutral.” Other states are planning income tax cuts; others are planning to use the increased revenue. Virginia already has put it into law that it’ll void an approved sales and fuel tax increase if it can begin collecting the tax on online sales. “It’s an issue and it’s an opportunity for each one of the states, to do what you want to do,” Harper said.
“I think there’s an equity situation there,” he said. “Right now, you’re requiring your local businesses to collect those sales taxes, but you’re not doing them on remote.” Harper said states that join the Streamlined Sales Tax project, which Idaho has thus far resisted doing, would be able to start collecting the taxes six months after the congressional bill becomes law. Without that step, he said, “I think that’s going to be much more challenging and onerous for you.”