Ramsey urges Internet tax OK: Bill now stuck in U.S. House after Senate passage

photo Senate Speaker Ron Ramsey


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NASHVILLE - Lt. Gov. Ron Ramsey joined with Gov. Bill Haslam Thursday to encourage congressional Republicans to support a bill allowing states to collect sales tax on Internet purchases.

"I'll encourage everybody. This is not a new tax," said Ramsey, R-Blountville, the state Senate speaker.

He said traditional retailers are disadvantaged by having to collect state and local sales taxes while many online retailers don't.

The bill only affects online sellers with more than $1 million a year in annual sales.

It passed the U.S. Senate on Monday, but faces an uncertain future in the U.S. House.

Haslam went before a U.S. House committee last year to support the "Marketplace Fairness Act" and said this week he is working to generate support from Tennessee's GOP congressmen.

We're a sales tax driven state," Haslam said earlier this week at an independent bookstore in Nashville.

"We have folks -- this bookstore -- that are providing a product and collecting sales tax and other folks who are providing the same product and not collecting sales tax."

At least one congressional representative doesn't sound like she'll budge.

"There's nothing fair about the Marketplace Fairness Act," U.S. Rep. Marsha Blackburn, R-Tenn., told the Times Free Press last week.

"We don't need the federal government mandating additional taxes on Tennessee families and businesses," Blackburn said.

Ramsey said the Brentwood Republican is "100 percent wrong."

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"It's not a new tax and it is fair," he told reporters.

U.S. Sens. Lamar Alexander, R-Tenn., and Bob Corker, R-Tenn., supported the bill. Alexander is a former governor and Corker once served as state finance commissioner.

Tennessee loses an estimated $748 million in uncollected tax on Internet sales, according to the National Conference of State Legislatures.

University of Tennessee economist Bill Fox, a widely acknowledged expert on the issue, said the bill is a good start because it levels the playing field.

Many people use brick-and-mortar stores as a "museum or library" to check out goods, then jump online to find cheaper prices, he said.

Tennessee's combined state and local sales tax rates can go as high as 9.75 percent. Not collecting that is a considerable advantage to out-of-state sellers, he said.

He said it's "almost unimaginable" that Tennessee congressional representatives would do something to hurt local businesses.

"They're basically saying we'd rather advantage a firm sitting in Washington or Oregon or Delaware on sales into Tennessee than competing firms in downtown Chattanooga," Fox said. "I don't get it."

Ramsey said Tennessee lawmakers put a proposed state constitutional amendment on the 2014 ballot to permanently ban a general income tax.

But the state does have the Hall income tax, which is limited to interest income and dividends from investments.

"I'd love to take that money [tax revenue from Internet sales] and reduce the Hall income tax," Ramsey said. "I'm in favor of eliminating it ... but I think we could for sure get to where we eliminate it for people over 65."

The political battle came to Tennessee in 2011 with online retailing giant Amazon, which located two giant distribution warehouses in Hamilton and Bradley counties.

Part of the deal with company made with former Gov. Phil Bredesen's administration was that Amazon would not have to collect sales taxes despite establishing a physical presence in the state. That drew political heat from state lawmakers and the threat of court challenges by retailers. Haslam brokered compromise in which Amazon agreed to begin collecting sales taxes beginning next year.

Amazon supported the bill that passed the Senate.

Contact staff writer Andy Sher at asher@timesfreepress.com or 615-255-0550.