(The Center Square) – Since the U.S. Supreme Court's South Dakota v. Wayfair ruling in 2018, 43 of the 45 states in the nation that levy sales taxes have adopted measures to collect them from online retailers.
The two outliers: Florida and Missouri.
During their 2021 sessions, lawmakers in both state legislatures again will consider bills to enforce online sales tax collection laws to essentially pick up money being left on the table in cobbling together fiscal year 2022 budgets withered by pandemic-induced revenue shortfalls.
But after e-fairness bills failed in successive sessions in both legislatures, versions filed for 2021 sessions include a tweak: revenue neutral provisions already incorporated into Missouri’s bill and set to be included in Florida’s bill, even after already advancing through two Senate hearings.
Florida lawmakers are considering a companion Senate-House bill to legally mandate online retailers that sell at least 200 items or $100,000 worth of items remit the state’s 6% sales tax to generate an estimated $1.3 billion in annual sales tax revenue.
Missouri legislators are debating proposed Senate-House legislation to require online retailers that sell $100,000 worth of items remit the state’s 4% sales tax, which annually could generate $142.5 million for the state and $138.6 million for local governments.
Missouri’s bill varies from Florida’s proposal, however, in nixing the transaction threshold and incorporating a scale that reduces state and local sales tax rates in tandem with rising receipts from online collections.
Such revenue neutral provisions are worth considering to include in his Senate Bill 50, said Sen. Joe Gruters, R-Sarasota, chair of the Republican Party of Florida.
“We’re going to add some tax relief into this bill,” Gruters told the Senate Finance and Tax Committee on Thursday. “We may not get all the way to being completely revenue neutral, but with a $1.3 billion potential advantage, there’ll be a lot to go around.”
SB 50 was advanced unanimously by the panel. It next goes to the Senate Appropriations Committee, which is its last stop before a Senate floor vote early in the 60-day legislative session that begins March 2.
SB 50’s House version, House Bill 15, which was filed Nov. 30 by Rep. Chuck Clemons, R-Newberry, awaits hearings before the House Ways & Means and Commerce committees.
E-fairness legislation is needed to protect Florida brick-and-mortar businesses that “get creamed out there on a daily basis,” Gruters said, because state law requires the purchaser, not the retailer, to remit sales tax.
As a result, Florida only collects about 3% of taxes from online sales, he said, adding SB 50 will be amended to include revenue neutral provisions when it goes before the Senate Appropriations Committee. Among ideas, he said, is trimming the state’s 5.5% sales tax on commercial rents.
Sen. Lori Berman, D-Boynton Beach, wondered how far revenue neutral should go, especially with lawmakers facing a projected two-year, $2.7 billion revenue shortfall and social services facing budget cuts.
“We’re in a crisis right now,” Berman said. “We have a lot of social services that we’re talking about having to make cuts to, and this is a time people are truly in dire circumstances.”
According to the state’s Revenue Estimating Conference (REC), adopting SB 50 or HB 15 would increase general revenue by $937.6 million next fiscal year and $1.08 billion annually; local governments would collect $229.5 million next fiscal year and $253.7 million the following year in additional revenue.
The Missouri e-fairness bill has one advantage over its Florida counterpart: the vocal support of Gov. Mike Parson, who told lawmakers to “pass the dang bill.”
Gov. Ron DeSantis has been silent. His $96.6 billion budget request does not anticipate revenue from online sales tax collections.