The U.S. Congress is mulling a bill that would allow states to charge online shoppers a sales tax just like they would pay in brick-and-mortar stores. But that prospect has many of Tennessee’s Republican politicians, both in Washington and Nashville, at seeming odds.
Dubbed the “Marketplace Fairness Act of 2013,” the law would give Tennessee the power to collect sales tax from online retailers when state residents buy from them.
Internet sales-tax supporters like U.S. Sen. Lamar Alexander, R-Tennessee, who helped shepherd the bill through the Senate earlier this month, contend that the change would put online businesses on an equal playing field with physical retailers.
Currently, consumers who shop online are technically supposed to file a sales tax on those purchases themselves, but very few actually do, giving Internet stores a price advantage.
Tennessee Gov. Bill Haslam, appearing alongside Alexander at a groundbreaking ceremony in Clarksville, Friday, echoed the senator’s support for the measure.
“The reality is it’s not a new tax; It’s due us.” Haslam, himself a Republican, told reporters. “It’s a tax that all these retail stores around here, they’re all paying when folks shop there and it’s really an unfair advantage. So we want those folks to collect the tax that the state is due.”
But some GOP lawmakers from the state aren’t so sure.
Glenn Jacobs, a professional wrestler turned political activist, caused a buzz last week when the libertarian website Reason.com reported that he’s considering a primary run at Alexander. Jacobs, known to WWE fans as “Kane,” has been rattling the Tennessee establishment GOP’s cage in recent weeks with pointed criticisms at state leaders like Haslam, Alexander and Lt. Gov. Ron Ramsey for their support of an Internet sales tax.
Some state lawmakers from the Republican supermajority meanwhile have been suggesting they would only go along with an online sales tax if rates were cut somewhere else, making the whole enterprise “revenue-neutral” for government and Tennessee shoppers as a whole.
State Sen. Frank Niceley, R-Strawberry Plains says he opposes the legislation, in part, because he’s concerned about Washington overreach in state revenue matters.
Niceley told TNReport he sees the Marketplace Fairness Act as “a way for the federal government to get their greedy, grubby hands on our sales tax.” But in the case that Congress does pass the law, Niceley says he’s already working on a bill to make sure it remains a wash for consumers.
“If they want to pass the internet tax, fine. We’ll cut it somewhere else,” Niceley said.
“Our first thought is take the sales tax off food. If they are going to pass this internet tax in the name of fairness with the bricks-and-mortar stores with the internet sales, then in fairness to the public, we need to make it revenue-neutral and take the tax off of food.”
Shelbyville state Sen. Jim Tracy and Lascassas state Rep. Joe Carr, both of whom are running in next year’s Republican primary against incumbent U.S. Rep Scott DesJarlais, have each said they favor the tax being revenue-neutral in Tennessee. DesJarlais hasn’t publicly stated a position on the Act.
During a recent campaign event, Tracy told a crowd, “We don’t need additional money at the state level…we need to cut spending at the state level.”
Tracy said if the Act passes he’d want to see state lawmakers and the governor “adjust the sales tax on groceries, do away with the Hall income tax, do away with other taxes.”
“At the state level, if it brings in additional revenue, it’s got to be revenue-neutral,” he said.
Friday, Gov. Haslam declined to say what he thought about such a plan.
“We haven’t even gotten the money yet, it’s a little early to start talking about what we’ll do with it,” the governor told reporters. “Until we have the funds, then we’ll have a discussion about what we do with it.”
“There’s a lot of discussion, we think it’s somewhere in the $350-400 or 450 million a year,” Haslam continued. “But right now there’s a lot of work to do in the House so it’s a little premature to talk about what we would do with the money.”