- The Washington Times - Tuesday, February 28, 2012

ANALYSIS/OPINION:

With the Republican National Convention less than six months away, candidates vying for the GOP nod are starting to give thought to possible running mates. In discussions of how best to achieve geographic and ideological balance on a ticket, Virginia Gov. Bob McDonnell’s name frequently pops up. Based on his recent actions, it shouldn’t.

For the most part, Mr. McDonnell has done a fine job managing the Old Dominion, but his name is less likely to be tossed in the ring after a 95-2 vote in the House of Delegates on Monday. Mr. McDonnell cut a “tax fairness” deal with Democrats and stakeholders forcing Virginia residents to pay a 5 percent surcharge to the commonwealth whenever they order something from Amazon.com and similar online outlets that have opened facilities in the state.

On Sept. 1, 2013, when this tax hike kicks in, Virginia will leap ahead of tax-happy jurisdictions like California and the District of Columbia. Amazon at present only collects taxes for the states of Kansas, Kentucky, New York, North Dakota and Washington. Virginia is also leaping ahead of common sense. There’s a legitimate reason to collect a tax on sales at a traditional brick-and-mortar store. The money, in theory, provides for police, fire services and all the common infrastructure that ensures commerce can be conducted in a safe environment. It’s rather a stretch to think that the same is true when a Virginia resident logs in to the Seattle-based Amazon website to buy a digital book for his Kindle reader. Greedy bureaucrats just think they’re entitled to our money, no matter what.

On Dec. 22, Mr. McDonnell had hailed the decision of Amazon to invest $135 million in opening warehouse facilities in Chesterfield County and Dinwiddie County, creating 1,350 jobs. The company was lured by $4 million in state incentives, including money from the tobacco settlement. Now that move is going to cost Virginians a lot of cash. For its part, Amazon has been clear that the company is fine with acting as a nationwide sales-tax collector so long as the rules are radically simplified and uniform.

Mr. McDonnell’s plan is so complicated that it will require a significant expansion of the bureaucracy to administer. The Virginia Department of Taxation estimates it will eventually take six staff positions and a $784,000 annual budget to impose the online sales tax. That includes field auditors who would go out and harass companies if their required reports fail to meet expectations, and customer service representatives to handle the inevitable complaints. The billing system would mail out 200,000 letters a year. All this is to collect a mere $24 million - revenue not likely to materialize after shoppers point their browsers elsewhere for a better deal.

Virginia has always required residents to report and pay taxes on out-of-state purchases. Turning this widely ignored, essentially voluntary fee into something mandatory is a tax hike, plain and simple. Combine this tax with the drive to turn every freeway in the commonwealth into a double-taxed toll road, and Mr. McDonnell’s legacy won’t be fondly remembered by Virginia consumers and commuters.

The Washington Times

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