October 22, 2014

Up Front - The Publisher's Column

'Help Me Help You'

Andrew P. Corty | 9/1/2011

Andy Corty
Andy Corty, Publisher

Remember the 1996 movie Jerry Maguire about a sports agent striking out on his own? The agent, played by Tom Cruise, had one client, a football star named Rod Tidwell, played by Cuba Gooding Jr., who kept insisting that Jerry "show me the money."

Football teams seemed more interested in other players because Tidwell, despite his talent, didn't advance his own cause. He was a middle-of-the-pack prospect who felt entitled to a big payday without doing much to earn it.

Tidwell didn't wise up until Jerry literally screamed at him: "Help me help you." Tidwell then went on to make some great catches, and the riches followed.

This sums up how I feel about the internet sales tax issue in Florida. State government, which says it's starved for cash, won't take the simple step of helping itself by trying to collect long-overdue sales tax revenues from online purchases.

Meanwhile, retailers in every corner of Florida are literally screaming, "Help us help you." They'd love some extra sales. They'd love to collect extra sales tax money for the state.

Here's how it works . . . or doesn't work. According to the law, you and I already owe sales tax on all taxable items we buy, whether we buy them in a store or online. But the state has no way to collect the tax for online purchases unless we report them. Of course, no one pays — neither you nor I.

So if a business doesn't have a physical location in Florida, then it can sell goods online without collecting the typical 7% sales tax. Buy a book from Amazon.com and you'll pay no sales tax. Go to a local bookstore, pay the tax. Buy a $500 camera online, pay no sales tax. Buy the same camera at a local mall, pay the $35 tax.

Three facts make this non-system particularly crazy.

First, in an era when all the talk is about more jobs for Floridians, this non-system is a jobs killer. If you can save money online, that's one more reason not to go to the mall. Local retailers lose out on sales, resulting in a cut in profits, so they hire fewer people.

Second, Florida is losing at least a billion dollars in tax revenue every year through this non-system. Some estimates are $1.5 billion. We desperately need funding for roads, education, courts, etc., but the money is lost.

And third, online business is skyrocketing, so the problem is getting worse.

Every thoughtful business group supports a fix. The Florida Chamber is in favor of taxing internet sales. Associated Industries of Florida is in favor. The Florida Retail Federation believes the current non-system is grossly unfair to its members and pushes employment to other states.

Florida TaxWatch, the non-partisan government watchdog, has been advocating for the adoption of the so-called "Streamlined Sales and Use Tax Agreement" for 10 years and says the topic is "by far the most significant tax compliance and collection issue facing Florida." Dominic Calabro, president and CEO of TaxWatch, notes that failure to collect internet taxes is "not a loophole — it's an economic stranglehold on Florida."

Legislative committees are starting their annual work this month. I urge them to think like businesspeople. Those of us running companies work on both sides of the ledger, trying to build revenues while holding down expenses. If I could find a few hundred million dollars — heck, if I could find ten million dollars — just by setting up a system to enforce the current law, I'd do that in a heartbeat. And we'd be helping Florida business and Florida employment at the same time.

So please, do what the local retailers say: "Help us help you."

— Andy Corty
Publisher
[acorty@floridatrend.com]

Tags: Publisher's column

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