House spikes online sales tax
BOISE – Cabela’s can continue tax-free catalog and online sales to Idahoans, despite having stores in the state, after the House rejected a bill Wednesday designed to close that loophole.
In most cases, when a company builds a store in-state, it is required to start paying sales taxes on online sales to Idahoans. But Cabela’s, a major sporting goods retailer, has avoided those taxes by structuring the company to keep online and physical stores legally separate – a move some lawmakers call unfair to other Idaho retailers.
The Senate targeted the tax exemption last week by transforming an unrelated bill already passed by the House into a measure designed to make Nebraska-based Cabela’s and other stores pay up. But the House voted 53-17 against considering the proposal, House Bill 74.
An identical bill died earlier in the House tax committee, and some House members said the Senate’s tactic violated the House’s constitutional right to set state tax policy.
Cabela’s opened a 132,000-square-foot store in Boise last summer, and it has plans for a 125,000-square-foot store in Post Falls.
The original bill would have provided tax breaks for airplanes used by nonprofit groups for charity in foreign countries.
“It was a very good bill, when we had it over here,” said Rep. Phil Hart, R-Athol, the bill’s House sponsor.
House Minority Leader Wendy Jaquet, D-Ketchum, said she supported the original aircraft bill, but her constituents would like a hearing on the sales tax measure. It would even the playing field for traditional businesses, she said.
“I do think that we need to go home and know that this has been resolved,” Jaquet said.
Rep. Bill Killen, D-Boise, agreed. “It closes the door on what I, and I think many others, believe was an inappropriate exception to our sales tax laws,” he said.
Hart said the public hadn’t received a chance to hear the amended measure’s pros and cons because it didn’t get a hearing. It’s bad policy for the House to let the legislative process be “hijacked,” he said.
Rep. Lenore Barrett, R-Challis, said the bill was strictly a “procedural issue” about power between the Legislature’s two chambers. She called it “stinky cheese.”
But Rep. Nicole LeFavour, D-Boise, said, “I don’t really feel it’s stinky cheese to ask an Idaho business to pay its sales tax.”
The bill could have returned $500,000 a year in lost revenue to the state, sponsors said.
Cabela’s also won an unrelated legislative victory this week. Legislation to allow the potential Cabela’s store in Post Falls to finance a freeway interchange, then get paid back by keeping a share of the sales taxes from the new store, received final passage in the Senate on Tuesday.
House Bill 250 authorizes State Tax Anticipation Revenue financing for developers anywhere in the state. North Idaho lawmakers billed the legislation as necessary to attract Cabela’s to Post Falls.