September 16, 2006 in Idaho

Cabela’s tax deal opposed

Associated Press The Spokesman-Review

BOISE – An outdoor sporting goods retailer that has persuaded Idaho not to require it to collect sales tax from online and catalog business with state residents could lose the benefit this winter if some state legislators get their way.

Sen. Brad Little, R-Emmett, says the concessions Cabela’s Inc. won from the Idaho State Tax Commission aren’t fair to other businesses and should be legislated out of existence.

Northern Idaho leaders who want a Cabela’s to locate there fear such a bill could hurt their chances, but Little is adamant.

“If we were trying to attract a Boeing plant or a biotech plant with a cure for cancer, that would be a whole different deal,” he said, calling Cabela’s treatment by the state “patently unfair.”

Idaho stores that aren’t afforded the break end up getting the short end of the deal because their online customers must pay the sales tax upfront, he said.

Before Cabela’s opened its retail outlet in Boise last month, it didn’t charge sales tax for Idaho residents who bought goods over the Internet or from its catalogs.

The Tax Commission allowed the practice to continue after the store was opened, saying a U.S. Supreme Court ruling allows physical retail stores that must collect sales taxes to be considered separately on some taxation issues from their virtual online or catalog businesses.

As a result, it’s left up to customers to send their sales taxes on online purchases to the state – something that rarely happens.

Cabela’s, based in Nebraska, says it often seeks such concessions from states where it opens brick-and-mortar stores.

Cabela’s has a $1 billion online and catalog business.

Nineteen states have approved similar exemptions, though the company is facing opposition in Maine, where state leaders say such an exemption would hurt catalog-retailer L.L. Bean.

If Cabela’s can’t persuade them to give in, it says it won’t open a store in Maine.

Northern Idaho lawmakers fear Little’s stance will damage their chances of luring Cabela’s to Post Falls. The retailer is considering that site or one in Eastern Washington just miles from the border.

Rep. Frank Henderson, R-Post Falls, who plans to introduce legislation to encourage the company to build in Post Falls, said if Cabela’s doesn’t follow through with that site, the state could lose millions in sales tax revenue.

“I’m concerned it may cost us Cabela’s,” he said. “I think we need to judge that loss with what we might gain by taxing Internet sales.”

Little acknowledged that Cabela’s could refuse to build in Post Falls.

“I’m in every way, shape and form in favor of economic development,” Little said. “But I don’t think a state should succumb to extortion or blackmail.”

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