Some Idaho lawmakers want the state to be ready if the federal government gets around to passing a tax on online sales.
The House Revenue and Taxation Committee approved a measure Friday that would create an account to stuff any new revenue generated if
Congress allows states to collect taxes for purchases made via the Internet.
The bill, presented by Twin Falls Republican Rep. Lance Clow, passed the committee with only one dissenting vote, cast by Rep. Lenore Hardy Barrett, R-Challis.
Clow told the panel that the measure does nothing to move the state toward collecting the tax, but merely readies the Idaho State Tax
Commission for the possibility that Congress acts on the issue.
If Congress approves an online sales tax, the revenue generated for Idaho would fall into the account, which would then be used for broad tax relief.
The Twin Falls Republican suggested the any money that finds its way into the account could help with the $126 million tax cuts approved by the same committee though those cuts depend on the economy growing to the point for the tax cuts to be implemented.
Stuffing the cash into a separate account, the lawmaker said, would also help stop lawmakers from using the funds to increase spending or growing government. Clow referred to the account as a “lockbox” at one point during the hearing.
Barrett opposed the measure, telling Clow she thought it unnecessary. “I know a third world war could start overnight,” she said. “Are we going to prepare for that? I simply oppose the whole thing.”
She added that Clow and others should wait until Congress acts before preparing for online sales tax collection.
Countering Barrett, Clow noted that the U.S. government spends billions of dollars annually on defense to, at least in part, prepare for wars.
The measure now heads to the House floor for debate.
The Associated Taxpayers of Idaho complimented the plan in a tweet to IdahoReporter.com Friday. “No enforcement mechanism, but if it does happen at the fed level keeping collection for future tax cuts isn’t a bad idea,” the group wrote on Twitter.
It’s highly unlikely that Congress will act to enact an online sales tax anytime soon. The U.S. Senate, controlled by Democrats, passed enabling legislation, dubbed the Marketplace Fairness Act, last year. Idaho Sens. Jim Risch and Mike Crapo, both Republicans, voted against the bill.
The U.S. House of Representatives never took up the measure, which has been highly controversial in the past few years with growing sales on Internet sites like Amazon.com and Overstock.com.