The speaker said he wants to hear both sides of the debate before he decides whether to support the bill.
Robert A. DeLeo
By KYLE CHENEY
BOSTON - Two years after he led a drive for a 25 percent increase in the state sales tax, House Speaker Robert A. DeLeo said he discussed for the first time Tuesday the details of a bill that retailers say they desperately need to compete with online outlets like Amazon.com.
Emerging from a Democratic caucus billed as a briefing on legislation to help Massachusetts recoup an estimated $300 million in uncollected sales taxes from Internet retailers, DeLeo said he has no opinion yet on the proposal, which was approved by the Legislature’s Committee on Revenue in August and has been a subject of state and national discussion for years.
“You know, it’s the first time I’ve really heard a little more than a cursory discussion about it. I want to hear both sides of the argument before I make a final decision,” he said. “I want to talk to the chair of Ways and Means in terms of where he may be, and obviously some of the members as well … I think what it was meant for was just to have some discussion. It wasn’t meant as an endorsement by me or anyone else of the bill or a rejection of the legislation. It’s a learning process.”
The plan – known as the streamlined sales tax – would begin to enable Massachusetts to collect an estimated $335 million in sales taxes from online purchases. Backers of the bill say states are collectively losing billions of dollars from one of their chief sources of revenue because online retailers aren’t required to collect sales taxes from consumers. In addition, retailers have held for a decade that tax-free online sales disadvantage brick-and-mortar stores, whose customers will simply purchase products online to avoid the tax. The issue has only gotten worse, they say, with the proliferation of smart phones.
Critics of the idea have portrayed the initiative as a new tax and an impediment to economic growth at a time when consumers have little discretionary income to spare.
DeLeo said the retailers association, which was invited to attend the closed caucus, expressed concern that without leveling the playing field between brick-and-mortar stores and online sellers, the retail landscape could undergo a permanent transformation.
“They feel if we keep on going on the present system that we’re going than the retail stores as we know it here in Massachusetts within a 10-year period of time may no longer exist or exist on a much smaller level,” he said.
The proposal has also been presented as a potential solution for cash-strapped states bracing for sharp reductions in federal support. Asked whether Massachusetts could turn to the streamlined sales tax to blunt the impact of federal spending cuts, Rep. David Linsky (D-Natick) called it “a consideration.”
“But I know that we’re very, very leery about ever making people dig deeper into their pockets,” he said.
Tuesday’s briefing, led by Revenue Committee co-chair Rep. Jay Kaufman (D-Lexington), included remarks from Chris Rants, former speaker of the House of Representatives in Iowa, one of 24 states that have adopted similar legislation. Scott Peterson, executive director of the Streamlined Sales Tax Governing Board – an organizing leading the national effort to encourage states to pass legislation - and Jon Hurst, president of the Retailers Association of Massachusetts, also offered remarks.
Hurst said after the caucus that if enough states pass the proposal, it could create an impetus for Congress to support the policy nationwide. He added, however that he received no indication whether the House would consider the proposal this session.
“In this economy, you’d be hard-pressed to find a retailer that’s going to take the risk to open a new store and do much hiring. The clear trends are to shop online,” he said.
States that have adopted the streamlined sales tax include: Arkansas, Georgia, Indiana, Kansas, Kentucky, Michigan, Minnesota, Nebraska, Nevada, New Jersey, North Carolina, North Dakota, Ohio, Oklahoma, Rhode Island, South Dakota, Tennessee, Utah, Vermont, Washington, West Virginia, Wisconsin and Wyoming.
In addition to Massachusetts, legislation is pending in Texas, Florida, Illinois, Virginia, Missouri, Maine, California, and Hawaii.
Although the issue has gained little traction on Beacon Hill in recent years, the disparity between Main Street businesses and online retailers has been a source of frustration for some lawmakers. In 2009, on the same day that the House passed a sales tax increase, Republican lawmakers held a press conference and warned that the hike would given internet retailers an edge over local businesses. The following month, Sen. Richard Moore (D-Uxbridge) proposed an amendment to the Senate’s budget to join the streamlined sales tax effort but withdrew it, claiming he wanted to see whether Congress would take it up first.
In a blog post disseminated Friday, a spokesman for the Patrick administration’s Department of Revenue described an “eye-popping” Los Angeles Times story that highlighted a proposal by Amazon to collect sales taxes for brick-and-mortar stores for a 2.9 percent fee.
“The irony here is that Amazon has been at the forefront of internet retailers who have vigorously opposed efforts to make them sales tax collectors,” wrote the spokesman, Robert Bliss.
Bliss also noted that in California, “Amazon agreed this year to abandon an effort to repeal a new Internet sales tax law passed by the state legislature and instead agreed to start collecting and remitting California's 7.25 percent sales tax, plus local taxes, beginning September 15, 2012. In the past few months, the company's executives have said they would prefer to see national internet sales tax legislation passed, rather than have individual states pursue their own policies.”