Twin Falls Republican Rep. Lance Clow wants Idaho to be ready should the federal government get its act together.
Ready for what? An $80 million tax hike on goods purchased over the Internet.
The House Revenue and Taxation Committee introduced a bill Tuesday to add Idaho to a national working group tasked with helping states prepare their regulations for any Internet sales taxes that might come.
The group, the Streamlined Sales Tax Governing Board, operates with 24 state members, including Utah, Washington and Ohio. Some states in the consortium are already seeing dividends from membership, as some retailers voluntarily remit sales taxes on Internet purchases.
If Idaho joins, Clow believes the state could see as much as $3 million in new taxes through voluntary payments.
Clow isn’t the only Idaho Republican salivating over new tax dollars that could roll in through Internet taxation. Earlier this year, Gov. Butch Otter endorsed looking at the idea, saying it would mean $82 million more to spend each year.
Idaho code already requires residents to pay taxes on Internet purchases, but the system for collecting that is voluntary and rarely used. A U.S. Supreme Court ruling prevents states from taxing online retailers unless that have a physical footprint within a certain state’s borders.
“I don’t know why people do not do that,” Clow said of Idahoans not reporting taxes on Internet purchases. “Technically, that’s not voluntary.”
For what it’s worth, Otter said earlier this year he gives the Idaho State Tax Commission about $600 a year to cover his online spending.
Congress has toyed with reworking the law to allow states to collect taxes on all online purchases, but gridlock plus special interest opposition makes passage a steep climb.
A bipartisan coalition of lawmakers introduced the latest version of the Marketplace Fairness Act in the U.S. Senate just last week. U.S. Sen. Mike Enzi, a Republican from Wyoming, is the bill’s lead sponsor, and co-sponsors include Democrats Dick Durbin of Illinois and Heidi Heitkamp of North Dakota.
For his part, President Barack Obama has endorsed allowing states to collect online sales taxes.
House Majority Leader Mike Moyle, R-Star, led opposition to the bill, saying the state needs to wait until Congress acts on the matter.
“Nothing we do today really matters until the federal government acts,” Moyle said.
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