Rhode Island got cut off from Amazon.com’s affiliate program two years ago this month after the General Assembly passed a law to force e-retailers to collect sales tax. The measure hasn’t brought in any new revenue, but policymakers have stuck to their guns in saying Internet sellers shouldn’t be exempt from collecting the tax.
Among those who make that argument is Governor Chafee. His controversial 1% sales tax proposal was specifically “designed to sunset upon Congress’s enactment of the proposed Main Street Fairness Act,” which would force Amazon and others to collect state sales tax, he wrote in a March letter to lawmakers. The administration estimates the state will miss out on $70.4 million in tax revenue in 2011-12 for purchases made from Amazon and other “remote sellers.”
The question has always been whether the Main Street Fairness Act actually stands any chance of passing in Congress. Now it looks like the legislation’s prospects may be brightening, Politico’s Michelle Quinn reports:
Sen. Dick Durbin (D-Ill.) is expected to step into the escalating Internet sales tax battle as soon as this week with a bill that would allow the 44 states — plus Washington, D.C. — that collect sales taxes to require out-of-state online retailers to pay up.
Durbin’s Main Street Fairness Act is similar to some previous congressional efforts to weigh in on whether states can force online businesses to collect sales taxes on items sold to state residents. But while those efforts failed, this year may be different. …
Similar legislation introduced last year by former Rep. Bill Delahunt (D-Mass.) went nowhere. However, the dynamics in Congress may have changed now that a growing number of states have passed or are considering bills to address the issue and online businesses are faced with the possibility of complying with many different state laws and many different state sales tax rates.
Durbin isn’t just any senator, either. He’s the Majority Whip – the chamber’s No. 2 Democrat – and a close ally of President Obama who hails from the same state, Illinois, which is among those suffering from huge budget deficits and seeking to get Amazon to start collecting sales tax.
The politics of the legislation are interesting, too, since the business community won’t necessarily be united in opposition to it. Brick-and-mortar retailers don’t like how the sales tax exemption gives Amazon and other e-retailers a competitive advantage, and Amazon itself has said it favors a national-level resolution to the issue.
(photo: Amazon.com Inc.)