Opponents of an Internet sales tax bill on Tuesday called it a “21st century version of taxation without representation,” warning it raises the prospect of taxing online retailers in jurisdictions where the owners of those businesses cannot vote.
Strongly supported by state governments, the “Marketplace Fairness Act” sailed through the Senate last month on bipartisan support, and already has dozens of co-sponsors in the House. Backers say it will level the playing field for traditional retailers by forcing Internet rivals to also collect state sales taxes.
But bill opponents, which include a number of the largest Web-based retailers, believe they have a better chance of blocking it in the Republican-controlled House, which is usually opposed to tax hikes.
GOP House Speaker John Boehner has not said whether or when he intends to take up the bill, but is expected to require a majority of his own GOP caucus to support the measure before calling a vote.
On Tuesday, a handful of congressmen and lobbyists held a press conference in the Capitol to attack the idea of taxing Internet sales.
“This bill is a 21st century version of taxation without representation,” said Rep. Ron DeSantis, Florida Republican.
The bill would require Internet retailers to collect sales tax from out-of-state customers. Technically, it’s not a tax on the stores, because it comes out of their customers’ pockets. It’s also not a new tax, because online shoppers are supposed to pay sales tax directly to the government, though few do in practice.
Anti-tax activist Grover Norquist, president of Americans for Tax Reform, strongly challenged the notion that the bill does not represent a tax increase.
“If you change the law and the government raises more money, it’s a tax increase,” Mr. Norquist said in an interview before the press conference. “It seems to me that it would be hard for a congressman to look you in the eye and say it’s not a tax increase.”
Mr. Norquist said the bill’s worst injustice is that it would allow state governments to tax people outside of their borders who cannot vote against them.
“They just want other people’s money,” he argued.
Internet retailers have also challenged the argument that the bill would level the playing field with traditional retailers. While brick-and-mortar stores only have to collect the local tax rates where they are located, they note, online stores would have to deal with nearly 10,000 different taxing jurisdictions, which each have different tax rates.
The compliance cost would be “next to impossible” to keep up with, said Montana freshman Rep. Steve Daines, one of the House’s leading GOP voices against the bill.
“There’s nothing fair about the so-called Marketplace Fairness Act,” he said.