IBJNews

Indiana House panel backs online sales tax collection

Back to TopCommentsE-mailPrintBookmark and Share

An Indiana House committee overwhelmingly approved a bill Thursday to require Amazon.com and other online-only retailers to start collecting Indiana's 7 percent sales tax this summer, six months earlier than planned under a deal brokered by former Gov. Mitch Daniels.

The House Ways and Means Committee voted 20-1 to advance the bill to the full House. The proposal would start requiring collection of the sales tax in July but would exempt online retailers doing less than $10,000 in business a year in the state.

Bill sponsor Rep. Tom Dermody, R-LaPorte, said the state's current policy allowing online retailers not to collect the sales tax gives them an unfair advantage over traditional stores.

"We're not asking anything other than putting businesses onto a level playing field," Dermody said.

The current policy dates to a 2007 deal with Amazon, which agreed to open its first warehouse in Indiana with the promise that lawmakers wouldn't push for online sales tax collection. Amazon now has five distribution centers in Indiana but hasn't given details on how many workers it has.

Daniels reached an agreement with Seattle-based Amazon last January for the company to start collecting state sales tax in 2014. That followed a lawsuit by Indianapolis-based shopping mall owner Simon Property Group against the state and a lobbying push by traditional retailers over the policy.

Indiana Retail Council President Grant Monahan said he believed most lawmakers agreed it was time to end a price break that takes customers away from stores in the state.

"Internet retailers, who many times aren't based here, don't employ that many Hoosiers, if any at all, don't support community organizations, don't pay taxes here, get that advantage," Monahan said.

Some legislative leaders, however, are wary of overriding the agreement between Amazon and Daniels, whose term as governor ended earlier this month.

Sen. Brandt Hershman, chairman of the Senate Tax and Fiscal Policy Committee, said the argument over business fairness must be weighed against the potential consequences of breaking the deal with Amazon.

"We need to evaluate how making that deal would be perceived in the business community in general with respect to Indiana honoring its commitments," said Hershman, R-Lafayette.

The Associated Press left a telephone message seeking comment from Amazon officials.

It isn't clear how much money the state might receive from additional sales tax collections.

A study completed last year by the Indiana Fiscal Policy Institute and Ball State University researchers estimates the state loses up to $114 million a year in uncollected sales taxes on internet purchases, while a state Senate budget leader has said it could be as much as $250 million.

Monahan said the retailers group was still studying how many online businesses would be covered by the bill but believed it would include most with large Internet sales. Current state law already requires sales tax collection for online sales by retailers, such as Wal-Mart and others, that have stores in Indiana.

Dermody said Daniels reached a good deal to attract Amazon to Indiana but that it was no longer necessary.

"I think part of the agreement was that Amazon needed this time to prepare for collecting sales tax in our state, and now we've seen where there are four other states that have sooner deals than we do," he said.

Rep. Ed DeLaney, D-Indianapolis, a co-sponsor of Dermody's bill, said Amazon and other online retailers should never have been allowed not to collect the sales tax.

"We should collect taxes based upon rules, not on handshakes," DeLaney said.

ADVERTISEMENT

  • Politicians are lairs
    Amazon relocated distribution warehouses to Indiana based on promises from politicians. Amazon has employed hundreds of Hoosiers. Hundreds of Hoosiers pay Indiana taxes, buy from local retailers, and support local communities. Remember, politicians are lairs. My recommendation to Amazon - move out of Indiana, take all you jobs to a more friendly and honest place, take all the local and state tax revenue you generate for the State of Indiana somewhere else. I’m sure all your facilities are leased and all your equipment could easily be packed up and shipped to a new, friendlier place. We could use some more unoccupied warehouse space here in Indiana. Maybe Mexico, UPS ships from there. Remember, politicians are lairs.
  • Agree with Nathan
    I agree with Nathan. Even if I get charged tax from Amazon, I'll still probably buy from them. I don't buy from Amazon just because I didn't have to pay a 7% sales tax. Usually the item I want is far more cheaper on Amazon than it is in a store... so, I'm going to Amazon because the item is cheaper, not because of the 7% tax... not paying tax is just icing on the cake. So, bring on the 7% tax to online sales... the item I'm looking for will still be cheaper online... so, I'll still buy it online even with the 7% tax. When will brick-and-mortar's learn that they will have to adapt better to the threat of online competition, since online retailers are not going to go away?
  • Right Tax, Wrong Level
    This will cascade into online sellers, even small ones, into tracking, reporting, remitting, and record keeping of 65 different tax authorities EVERY MONTH, each with different forms and different procedures, not to mention keeping up-to-date on literally tens of thousands of sales tax jurisdictions and rates that change constantly. The cost burden will be enourmous, and smaller e-tailers will be forced out of the market entirely. Instead, a single Federal sales tax, applicable to ALL consumer sales, fully handled alongside the local tax each business already collects, reports, and remits. Just one more line on one form they already manage, same rate across the board, paid to their home state. Cost to e-tailers: nearly zero. States should be forever barred from cross-border taxation, in favor of a Federal consumption tax. No exemptions, no gimmicks. The broadest application = the lowest rate possible. Used goods, services, durables, meds, education, essentials, everything. Anything short of that just leads to a higher rate, special favors, and treats. Those on the government dole just get a higher benefit by same rate to make them whole...the money comes back as it's spent, so costs nothing, as the extra amount in the benefit is just "borrowed" until collected back. Consumption tax has to have balance. When the rate gets higher than the shipping, folks will buy online from out-if-state. Brick-and-mortar retailers are not telling the whole story, leaving out the fact that online sellers face much more ferocious competition, so they must sell for less, and thus margins are thinner. Brick-and-mortar retailers must adapt to a changing environment, in many ways, from many forms of competition both locally and online, and if they haven't seen that coming by now they should suffer their own negligence.
  • Make my day.
    Go ahead and tax my Amazon purchases, dudes. It won't change my buying habits one iota. Unless it's to make sure that I shop even less at Simon malls than I already do.
  • Online sales taxes
    These blood sucking politicans will try every trick in the book to shaft the general population out of a few more dollars. I think they are following our "Great leader" in Washington ,D.C. They want every penny they can get. Throw the bums out!

Post a comment to this story

COMMENTS POLICY
We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
 
You are legally responsible for what you post and your anonymity is not guaranteed.
 
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in IBJ editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
 
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
 
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.
 

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by
ADVERTISEMENT

facebook - twitter on Facebook & Twitter

Follow on TwitterFollow IBJ on Facebook:
Follow on TwitterFollow IBJ's Tweets on these topics:
 
Subscribe to IBJ
ADVERTISEMENT