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Internet sales tax collection bill clears Senate tax committee
An effort to require out-of-state online retailers to collect sales taxes on purchases made by Floridians advanced Thursday in the Senate as economists project the move could bring in more than $1 billion a year in revenue.
But as the Senate Finance and Tax Committee voted to support the proposal (SB 50), sponsor Joe Gruters, R-Sarasota, said efforts are underway to balance the increased tax collections against other funding sources to make the change “revenue-neutral.”
“We’re going to add some tax relief into this bill,” said Gruters, also chairman of the Republican Party of Florida. “We may not get all the way to being completely revenue-neutral, which we’ll make sure that’s clear. But, however, with a $1.3 billion potential advantage, there’ll be a lot to go around.”
Before the meeting, a panel known as the state Revenue Estimating Conference projected the bill would increase state general revenue by $937.6 million next fiscal year, with the amount increasing to $1.08 billion in the following years. Local governments across the state would collectively see revenue go up $229.5 million next fiscal year and by $253.7 million the following year.
Gruters suggested one offset could be through lowering a 5.5 percent sales tax on rent collected from commercial properties, a tax business groups have long criticized. The bill will next go to the Senate Appropriations Committee and could be heard by the full Senate after the annual legislative session starts March 2.
Currently, retailers that have a physical presence in Florida must collect and remit sales taxes for items sold in the state. The bill seeks to also put the responsibility for collecting and remitting taxes on retailers that don’t have such a presence but are selling products to Floridians.
Florida business groups have argued for years that Florida retailers are at a competitive disadvantage because out-of-state businesses aren’t collecting the sales taxes. But fears about the proposed change being considered a new tax on consumers has stymied efforts to pass it.
Through what is sort of an honor system, Florida residents are supposed to submit sales taxes when they are not collected by out-of-state retailers. But few Floridians comply with that requirement.
Sen. Shevrin Jones, D-West Park, back the change as the state faces a budget shortfall in the upcoming fiscal year because of economic damage caused by the COVID-19 pandemic. Lawmakers will craft a budget for the 2021-2022 fiscal year during the legislative session.
But Sen. Lori Berman, D-Delray Beach, expressed concerns about plans to offset the increase in potential revenue.
“We are in a crisis right now,” Berman said. “We have a lot of social services that we’re talking about having to make cuts. And this is a time when people are truly in dire circumstances. So, I’d like to make sure that the vast majority of this increase, the increase that we’ll be collecting under the tax that’s already in existence, will go to social services.”
