Governor Deval Patrick is pushing lawmakers to expand the state's ability to collect sales tax on products sold over the Internet, which could add millions of dollars in revenue each year and alleviate a severe budget crisis.Patrick's revenue commissioner, Navjeet K. Bal, has submitted a report to the Legislature asking it to approve an Internet sales tax by the end of this year. Currently, only Internet retailers that have in-state locations, such as stores and warehouses, collect and remit sales taxes on purchases by Massachusetts residents.
The proposed law would expand that to collect taxes from Internet retailers that have agreed to participate in a multistate compact, called the streamlined sales tax initiative. Because participation is voluntarily, Massachusetts officials estimate the state would collect only an additional $15 million in taxes a year.
Still, state officials said passage of the law would help spur Congress to approve a broader version of an Internet sales tax that could produce hundreds of millions of dollars in additional revenue.
So far, 22 states have adopted Internet, phone, and mail-order sales taxes based on the streamlined sales tax sys tem.
Legislation by Congress would require all 45 states that have sales taxes to collect on those transactions. Because it would be a federal mandate, the law would dramatically increase the number of retailers required to participate, generating as much as $545 million for Massachusetts alone, according to an analysis by the University of Tennessee.
The US House version of the bill is sponsored by Representative William Delahunt, Democrat from Quincy, who has argued that implementing the tax agreement is more about creating a fair tax policy than raising revenue.
"This will protect Massachusetts businesses that are disadvantaged by the current system," Delahunt said. "Small- and medium-sized businesses need this in order to compete with large sellers from out of state" that aren't required to collect and remit sales taxes.
But opponents argue such a tax would unfairly burden Internet retailers with the cost and complication of setting up systems to collect the tax and expose them to audits if tax collectors argue they did not collect enough.
Damn it, Obama, give him a job already!
UPDATE: More from SouthCoastToday.com, Red Mass Group and the Globe.
