Washington Retail Insight

House Schedules Hearing on Sales Tax Fairness

By J. Craig Shearman
Washington Retail Insight
July 18, 2012

A House committee has scheduled a hearing on sales tax fairness for next week, but backers of the legislation say the session is more likely to lay groundwork for a vote next year rather than result in any immediate action.

“There have been some favorable developments,” Senate Majority Whip Durbin, D-Ill., told reporters this week. “I wouldn't say we're quite there yet.”

Given the packed congressional calendar before lawmakers break to campaign for this fall’s elections, “it’s challenging to think that we could move a bill that’s not a must-pass bill,” Durbin said.

“In this election season, any reference to tax increases, especially for a conservative Republican, is toxic,” Representative Steve Womack, R-Ark., told Politico. “To get it to the floor, it’s quite a stretch.”
Durbin is a leading cosponsor of the Marketplace Fairness Act while Womack is sponsor of the Marketplace Equity Act. While details differ, both bills would allow states to require online retailers to collect sales tax the same as local stores.

The House Judiciary Committee has set a hearing for Tuesday. Witness have not been officially announced but reportedly include Womack, bill cosponsor Jackie Speier, D-Calif; Tennessee Governor Bill Haslam, and representatives of the Tax Foundation, the Streamlined Sales Tax Governing Board and NetChoice, a trade group opposed to online sales tax.

A number of Republican governors have come on board recently, and Womack said he has been working closely with conservative colleagues who want to support the bill but “are looking for cover so they aren’t perceived as supporting a tax increase.” Womack has maintained that taxing online sales would not be a tax increase because consumers are already required to report untaxed purchases and pay the tax as “use” tax.

“I don’t think it’s a partisan issue,” NRF Senior Vice President for Government Relations David French told The Hill. “Principled conservatives who don’t want to see the size of government grow – we agree with them.”

NRF launched a nationwide campaign in May to raise awareness of the sales tax fairness issue and is seeking passage of legislation as soon as possible. With e-commerce continuing to grow as a share of overall retail sales, French said lawmakers will eventually be forced to address the issue.
Durbin and other sponsors tried to attach the Marketplace Fairness Act as an amendment to a small business bill considered in the Senate last week but were unable to get a vote after other initiatives filled the quota for amendments. Senators are still looking for a vehicle to move the bill forward and Womack said the same could be done in the House but “I’m not hearing any whispers to that yet.”

© 2012 National Retail Federation