Lawmakers have good reasons to address online sales tax issue

Nebraska lawmakers are on the right track with a proposal that would attempt to level the retail playing field, which as is gives online merchandisers an unfair advantage by not having to charge and/or collect sales tax.
Sen. Dan Watermeier of Syracuse introduced LB44, which would require online retailers without a physical presence in the state to report the names of customers and the amounts of purchases sent to Nebraska if their gross sales revenue in the state is over $100,000, or they make more than 200 separate transactions in the state that year. The bill advanced to select file on a 28-13 vote last week, but will require more support to pass, and a 2/3 majority vote to override a threatened veto by Gov. Pete Ricketts.
This bill deserves to pass for two very solid reasons: a) It simply is not fair that brick and mortar businesses have to charge and collect an additional tax on each and every sale while their online competitors do not; and b) it is estimated that Nebraska is losing out on $30 to $40 million a year in sales taxes for online transactions.
On the first point, the retail landscape has evolved to the point it is almost unrecognizable from five and certainly 10 years ago. The undeniable fact is millions of consumers prefer to shop from the comfort of their living room, logging on their cell phone, laptop or desktop computers to buy everything from major Christmas gifts to delivery pizza. Online retailers have a major competitive advantage in not having to maintain a business front and all that goes with it, but they should not get an extra bonus in the form of what amounts to a sales tax exemption.
Currently, based on a 1992 U.S. Supreme Court ruling, a business must have a physical presence in the state before it can be required to collect state sales taxes. That theory is outdated, making it challenging for retailers both large and small to compete.
The second major selling point for LB44 is blatantly obvious, especially in a year when our state faces a projected $900 million budget shortfall. Collecting sales tax for online transactions could generate $30 million to $40 million a year, though some would argue the number could realistically be as high as $100 million, per year!
Opponents to this bill contend that it is unconstitutional, though it is based on model legislation passed in other states. Dist. 34 Sen. Curt Friesen, as well as the bill’s sponsor, Sen. Dan Watermeier, contend that it will pass the legal mustard test since it gives merchants the choice of collecting sales taxes or reporting the amount due to the state and their customers.
In a world where technology is advancing to the point that we may one day see drones delivering packages to our doorstep, surely lawmakers can figure out a way to create a system that charges retailers fairly, whether their address is on Main Street or in the cloud.
In reality, LB44 would likely be the first step in a process that will need to evolve in future years, but it would be a significant and necessary step forward.
Kurt Johnson

Rate this article: 
No votes yet