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Sunday, Nov 23, 2014
Politics

Internet sales tax splits Republican supporters


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TAMPA ญญ- The push for a national plan to collect sales taxes on Internet sales is putting Republicans in Congress in a bind as two groups of their traditional supporters sharply oppose each other on the issue.

Anti-tax conservatives and tea party-style Republicans oppose taxing retail sales made over the Internet, calling it a new tax or a tax increase.

Retailers say it's not a new tax, but one that's already owed and goes uncollected. It's unfair, they contend, that their sales are taxed while Internet sales of the same goods aren't.

Both sides are vehement on the issue.

The result: Republican Congress members are splitting over a bill now in the House to create a method for local and state governments to tax Internet sales, and some Republicans are keeping quiet about their positions until they have to vote - which may not happen soon.

"It is a political bind or a Catch-22," said Florida Republican political strategist Brett Doster. "The issue's more about fairness than about taxation, but we've seen people try to use it as a taxation issue."

Doster, who favors the legislation, said Republicans in Congress "are going to have to make a tough decision between the interests of small bricks and mortar businesses or political expediency."

He said he doubts this issue alone would inspire a primary challenge to a Republican legislator, but in a district narrowly divided between Democrats and Republicans, "This issue could move business people to the other side," meaning support a Democrat.

Underscoring that view, the Florida Retail Federation, normally a faithfully Republican donor, gave $50,000 to the Florida Democratic Party in March, just before the legislative session.

The bill passed the Senate in May on a 69-27 vote, with most Democrats supporting it.

In that vote, Republican senators split, 21 in favor and 22 opposed. Florida Republican Marco Rubio voted no, and Democrat Bill Nelson voted in favor.

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The bill is now in the House Judiciary Committee, and advocates hope for a vote this year - although some insiders say the Republican leadership isn't eager to put such a hot potato on the floor of the House, forcing Republicans to take sides either against conservative activist groups or against the mom-and-pop store owners in their districts.

Three Republicans in Florida's House delegation - Dennis Ross of Lakeland, Ander Crenshaw of Jacksonville and Mario Diaz-Balart of Miami - are among the 66 co-sponsors of the bill, dubbed the Marketplace Fairness Act, in the House.

But two other Tampa area GOP Congress members, Bill Young of Indian Shores and Gus Bilirakis of Palm Harbor, didn't respond last week to questions about their positions on the bill. Nor did several Florida GOP House members allied with the tea party movement.

"I think we've got a good chance for a vote this year," said Jason Brewer of Retail Industry Leaders Association, backing the bill. "We feel confident about the momentum we have, and a growing consensus that the time to fix this is now."

But Tom Gaitens of Apollo Beach, a co-founder of the Tampa Tea Party and former state director of the FreedomWorks conservative advocacy group, said the conservative constituency he represents is ready to fight the issue.

"If it comes up for a vote, you can be sure the tea parties and 9-12s are going to speak loudly about it," he said, referring to the 9-12 Project movement started by talk show host Glenn Beck. "We haven't yet because we're involved with issues, but taxes are one of our core issues."

Gaitens said Ross, a favorite of tea party Republicans in the past, likely won't suffer politically for his stance - "I understand why he's doing this, and he's been very strong on other issues."

But he said he thinks other Republicans are feeling the pressure.

"A lot of Republicans are keeping their heads low on this. Businesses in your district have a big sway on you as a representative, and they don't want to offend the brick-and-mortar retailers."

One of the leading opponents of the move is the Americans for Tax Reform group, with its leader, anti-tax zealot Grover Norquist.

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All but one of Florida's Republican House members have signed the organization's "no new taxes" pledge, including Ross.

Norquist said he considers a vote for the Marketplace Fairness Act a violation of the pledge.

In an interview, Ross said he's not breaking his pledge because, "It's a lawful tax that's already due. The fact that people don't know they owe it is just a misperception."

He acknowledged being caught between two constituencies: "I get nastygrams from some people who say it's a new tax on the Internet, but I won't be bullied into this.

"I'm doing my best to preserve a fair playing field for those who have invested in real estate and inventory."

For years, retailers have complained about customers who come to their stores, inspect their merchandise, then leave and order the same item online, for a price that doesn't include sales tax - a practice they call "showrooming."

"If you're talking about a $1,000 set of tires, that's $70," said Chris Brazzeal of Brazzeal's Tire and Service in the West Shore area.

"They say they'd like to get them from us because of the service we provide, and ask if we can match the price. If that playing field was level, we could compete."

Brazzeal, a Republican, said he was "shocked" when he went to Tallahassee to meet legislators and discuss taxing Internet sales. "The idea of being tax neutral took precedence over what's fair," he said. "They were all sensitive about being the person that increases taxes."

Olga Rhoads of Olga's Bridal Boutique on South Dale Mabry Highway, also a Republican, estimates that "showrooming" cuts her business 15 to 20 percent.

"I don't believe in raising taxes, but it's not a new tax," Rhoads said, "it's just taxing people that should have been paying taxes all along and haven't been."

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For years, one of the main arguments against the Internet sales tax has been the difficulty for an online retailer in calculating proper sales taxes for thousands of city, county and state jurisdictions nationwide.

The Senate bill purports to solve that problem by requiring participating states to provide online sellers free software that calculates the appropriate tax.

John Fleming of the Florida Retail Federation said passing the bill could increase revenues to Florida and its local governments by about $450 million a year. Nationwide, estimates range up to $23 billion.

Another argument is that online sellers are "in a whole different domain and realm" from traditional merchants, as Gaitens put it.

With no local stores, they don't use the services local governments pay for - police and fire protection, water and sewer service, roads to allow customers to get to the store.

"Does government need to get into every transaction? If it's just to raise revenue - we've found out we have plenty of revenue, but it's getting wasted," Gaitens said. "We just continue to feed the beast."

Fleming called that "a foolish and frustrating argument."

"That consumer lives in Florida and uses all those services," he said. "The tax is collected by the business, but you as an individual are the one responsible to pay it."

wmarch@tampatrib.com

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