Thursday, July 30, 2015
Senate Republican Caucus Opposes Automatic Sales Tax Expansion
Senate VoteEstablishes “Internet Sales Tax”
Boston- The State Senate Republicans today objected to a bill which would automatically mandate state sales taxes on items purchased online if the federal government permits them to be taxed. The bill requires the Commissioner of the Department of Revenue (DOR) to create new regulations and penalties for business to enforce the collection of taxes on sales made online and automatically adopt any new expansion of taxes in Internet sales approved by the federal government.
“There are far too many questions and too many risks to put this tax increase on autopilot,” said Senate Minority Leader Bruce Tarr (R-Gloucester). “The measure before us has the impact of a tax increase because things that aren't being taxed will be taxed. We should not be ceding to Congress tax decisions that rightly remain here in Massachusetts.”
The DOR estimates that the automatic tax hike bill would allow Massachusetts to collect $150 million to as much as $200 million a year in additional taxes from consumers.
“We should be prepared for changes in federal tax laws and we should be seeking fairness for our local retailers but that doesn’t mean we should necessarily take action prematurely particularly when we know it will lead to a new tax that will extract as much as $200 million from our citizen consumers,” said Tarr. “We already have two methods to collect sales and use taxes, we don’t need to put businesses under the microscope as they jump through more hoops and hurdles to comply with new regulation without having clear information and justification for doing so.”
Tarr and members of the Republican Caucus expressed concern with relinquishing control of tax law to the actions of Congress. Tarr, expressing concern that changes in Washington could trigger an automatic tax rate and collection expansion opposed the bill as put before the Senate and offered amendments which would:
· Remove from the bill language that requires the automatic adoption of new DOR rules to implement tax increases and mandates dictated by the federal government,
· Reduce gradually the state tax rate from its current 6.25% to 5%, and
· Direct the DOR commissioner to lower the overall sales tax rate, in the face of any future expansion of taxable sales transactions from on-line sales, to keep the state’s overall sales tax collection at a revenue neutral level.
Some local retailers, concerned with fairness of online sellers exempted from collecting the 6.25% sales tax, say they are at a competitive disadvantage to those selling the same items online.
Tarr gave credence to their concerns and expressed that the matter deserves more research and a fuller understanding, “While the goal of fairness is important and we should pursue it vigorously, this bill as written ties us to whatever the Congress may choice to do, and has the potential to create a system that taxes purchases on the Internet at a rate higher than their counterparts, and has a myriad of confusing, cumbersome and costly compliance mandates. We shouldn’t take that risk now, and possibly subject consumers and retailers to those hardships, without knowing all the facts,” said Tarr.
The bill, entitled an act to promote sales tax fairness for main street retailers through minimum simplification, will now move to the House for consideration.