News From Terre Haute, Indiana

December 6, 2012

EDITORIAL: Online sales taxes — now

Delay in collecting revenues is unfair to other state businesses

The Tribune-Star

TERRE HAUTE — Just about a year ago, when Indiana Gov. Mitch Daniels sealed a sweetheart deal with online sales giant that let that company delay collecting sales tax until 2014, many, including us, complained about two more years of no tax revenues for Indiana from that merchant and others similar to it.

The reason for the complaint: The deal gives an unfair business advantage to online commerce over what have popularly come to be called brick-and-mortar locations in malls and storefronts.

The advantage specifically is 7 percent — the amount of sales tax Indiana merchants are required to collect on in-person transactions and remit to the state. Funds from those tax collections are then returned to local communities to provide needed services. One estimate is that between $75 million and $125 million is being lost each year from online transactions.

Heretofore, online merchants have not been required to collect sales tax from sales to Hoosiers. By law, consumers are supposed to pay the state the 7-percent sales tax on online sales — but that rarely happens. The Daniels-Amazon agreement will make that happen.

But now the Indiana Merchants for Tax Fairness Collection wants it to happen faster — on July 1, 2013, rather than in 2014. The group made that announcement on Cyber Monday, when it urged the General Assembly to pass legislation to accelerate the tax collections by six months to get money flowing into state coffers that much sooner.

A Republican Indiana House of Representatives member, Tom Dermot, and a Democratic counterpart, Ed Delaney, plan to introduce a bill to speed up the clock on the issue. Sounds like bipartisan support.

And we can see no reason not to move on the issue quickly when the Legislature gets into the swing of things early next year. After all, Amazon itself says, as reported by CNHI’s Statehouse reporter Maureen Hayden, its sales are no less in states with sales tax collections than in states without.