The National Retail Federation will try to prod Congress into passing a major Internet sales tax bill during the upcoming lame-duck session of Congress.
The trade association will spend “six figures” on ads and other media efforts to get lawmakers, including defeated ones serving out the remainder of their terms, to finish the legislation before the current session ends and the new Republican majority takes over.
Spokesman Stephen Schatz said the federation also will fly local retailers to Washington to press their cases, focusing on wavering House lawmakers. The Senate passed the Marketplace Fairness Act last year, 69-27, but the House never took it up. The bill would allow states to require online merchants to charge customers sales tax. The taxes would be based on the state where the customer lived, not where the merchant is located.
“We believe that sales tax fairness legislation will move in the lame-duck session whether in the form of the Marketplace Fairness Act … or another vehicle,” Schatz told the Washington Examiner.
Nine senators who voted for the Marketplace Fairness Act were defeated in last week’s election or are retiring. Since legislation must be re-introduced when a new congressional session starts, the nine lost votes means the legislation is now potentially vulnerable to a Senate filibuster. That’s assuming that the incoming majority leader, Sen. Mitch McConnell, R-Ky., who was among the 27 who opposed it, is even open to allowing another vote.
Thus, the NRF is mounting a push to finish the bill now before the political landscape gets any rougher — and it is already plenty rough. A spokesman for Speaker John Boehner, R-Ohio, told Roll Call Monday that the Marketplace Fairness Act “won’t move this year.”
Nevertheless, NRF and its allies are hoping they can still get a measure passed by linking the Marketplace Fairness Act to legislation that would extend the current moratorium on Internet access taxes, which is scheduled to expire on Dec. 11. Top Senate Democrats such as Majority Whip Dick Durbin, D-Ill., have co-sponsored legislation to that effect. Backers are hoping that preventing access taxes will be popular enough to override lawmakers’ opposition to sales taxes.
Conservative anti-tax advocates say lawmakers should call that bluff: “Passing a short term extension of the Internet tax moratorium that still allows states to implement Internet [sales] taxes is not a ‘deal’ Americans should accept. It is far better to let the [access tax] moratorium expire and reinstitute [it] in the next Congress than to accept a bill that exposes Americans to 45 different state departments of revenue and 50 states’ regulatory burdens,” said Katie McAuliffe, federal affairs manager for Americans for Tax Reform.
Ever since Internet commerce took off in the late 1990s, the retail industry has argued that online retailers have an unfair advantage because sales taxes are rarely applied to those purchases. They have allies among state and local government officials who rely on sales taxes for revenue. The National Retail Federation says that lost revenue now totals $25 billion annually.
Their efforts to collect those taxes have been stymied by a 1992 Supreme Court decision that said only Congress could require online levies because the sales were interstate commerce.
Critics charge that the coalition’s “level the playing field” rhetoric is less about fairness and more about raising taxes and stifling competition. While taxes are rarely applied to remote online sales, customers sometimes still must pay shipping and handling costs, which usually erase any tax advantage.
“After Speaker Boehner said that [the Marketplace Fairness Act] was a non-starter in the House, it would be a lousy underhanded approach to try to cram seriously flawed legislation down the throats of Americans,” McAullife said.
