Tennessee and other states have been locked in debate for years over making sales tax collections fair to both traditional brick-and-mortar stores and online retailers that don’t have stores in a given state. Now, U.S. Sens. Lamar Alexander and Bob Corker of Tennessee are backing a bill that would end the confusion and allow states to require online retailers to collect sales taxes.
Neither paying nor collecting taxes is exactly fun, but it is reasonable to expect retailers of whatever type to abide by the same rules. That is doubly true in Tennessee, which fortunately has no general state income tax but must therefore rely heavily on sales tax collections.
The bill “ends a subsidy for some businesses over others,” Alexander said, and “ends a subsidy for some taxpayers over others.”
He was referring to customers who gain a benefit by not paying taxes on online purchases, while taxes are assessed on purchases made at traditional stores.
Corker noted that by law, taxes on online sales are already due, but this legislation would provide for the actual collection of those taxes.
Alexander estimated that Tennessee could gain hundreds of millions of dollars in new revenue under the law. The expanded collections could ultimately even allow the state to reduce its sales tax rate.
Some online retailers are balking at the proposal, but it makes sense to create a level playing field.