Business
Study: Lack of Sales-Tax Collections by Out-of-State, Online-Only Retailers Cost Florida $450 Million a Year
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Credit: John Taylor - telegraph.co.uk | Petunyia - ShutterstockOut-of-state online-only retailers will cost the state roughly $450 million next year by not having to collect and pay Florida's government for sales taxes on online purchases, according to a study released Wednesday by the Florida Alliance for Main Street Fairness.
The alliance, which includes the Florida Retail Federation, the Florida Chamber of Commerce and Associated Industries of Florida, held a conference call Wednesday as they continue to pressure state legislators to close the existing tax loophole that gives a sales and marketing advantage to out-of-state online dealers.
Legislators have been reluctant to tackle the issue, as it could be seen by consumers as a new tax when making an online purchase.
For those in the retail sector, the state needs to put pressure on companies such as Amazon that are able to offer similar items that Florida retailers offer -- online or in store -- while promoting to Florida consumers that they won’t have to pay the additional state sales tax charges.
“Our only issue is that we all be treated the same,” said Rick McAllister, president and CEO of the Florida Retail Federation. “All retailers should be treated the same, regardless of where they are located and how they deliver their products.”
The independent Inkwood Books in Tampa also offers sales online, but because of the way taxes are collected, co-owner Carla Jimenez says out-of-state competitors have a price advantage.
“It’s edging local retailers out of business,” Jimenez said. “If I close my doors, the person that mows my lawn and paints my building and the employees that I have, the impact is huge. We need to keep that in mind as we strain our economy.”
McAllister said Congress has dragged its feet on the issue for more than a decade, which is why retailers want the state to act in the 2012 session. While some of Florida’s largest and most influential business groups support the tax, the prospect of getting through the Senate won’t be easy.
Senate President-elect Don Gaetz, R-Niceville, and Sen. John Thrasher, R-Jacksonville, have both openly endorsed the chamber’s agenda. However, Senate President Mike Haridopolos, R-Merritt Island, remains doubtful about the online tax loophole.
Haridopolos, saying this may be a federal issue, said he would want the proposal to be offset by a reduction in taxes in another area.
The study, without advocating any specific move, surmised the state could eliminate the corporate income tax.
Mark Wilson, president and CEO of the Florida Chamber of Commerce, said the tax-collection process gives out-of-state Internet-only companies a 6 percent to 8 percent sales advantage over Florida retailers.
“This encourages Floridians to buy elsewhere,” Wilson said.
Besides the competitive disadvantage Florida retailers face, the state also could be hindered in its effort to attract business to the Sunshine State if that business does most of its sales online.
“We are discouraging people from opening businesses in the state of Florida,” Wilson said. “If the three of us wanted to start a business today, we wouldn’t start it in Florida. We’d move to a smaller market in a state where we could sell into Florida without collecting the tax.”
Donna Arduin, lead economist on the economic study and a principal for the firm Arduin, Laffer & Moore, said the more online sales increase, the more Florida could see revenue decline.
The study estimates that by 2020, the total tax revenue loss will grow to between $842 million and $937 million, meaning Florida’s potential tax revenue during the current decade would be between $6.5 billion and $6.8 billion.
Some states have already addressed the issue, such as California, which recently signed a deal for Amazon to begin collecting taxes on sales to California residents by 2013.
Wilson said the potential revenue should be a secondary focus to jobs and helping small businesses.

Comments (1)
If a Floridian purchases something out of state (on-line) how is that evading taxes? These boobs (Florida businesses listed above) are so infuriated that they are raked over the coals in taxes they want others to share in their cowardly misery.