In Lansing, the debate on Internet sales tax is looming heavily, and one of the chief advocates is a Macomb County lawmaker. However, the bill might never see the light of the day because the world does not seem to be prepared for the things involved in managing such type of tax.
Internet Sales Tax?
Some weeks ago, the state House committee approved the legislation which would require online retailers to charge a sales tax of 6% on any product sold in Michigan. However, there is a strong opposition in the background among the lawmakers of the Republican Party, meaning that the full house vote on the issue might never be a reality, according to the Roseville Democrat, Rep. Harold Haugh.
The bill in the House Tax Policy Committee is backed by Haugh, one of three Democrats; though he said he would not be surprised if the House leadership did not back the legislation. According to him, the tax is not new, as for many years, it was expected that Congress would do something about it, being a tax which should have been implemented for many years.
According to those who support an Internet tax, which many states are already collecting, the tax helps to create level-playing field between many of the giants such as Amazon.com, Overstock led by Patrick Byrne and EBay.com in internet sales and the “brick and mortar” (traditional) retailers, especially the small-scale ones. Sales tax does not form part of many online sales, making the online sellers to have an advantage of 6% on every sale made.
Why the Law is Opposed
In addition to the Republican legislators, there are many other people or groups who do not support the tax plan. Some of the major opposition groups is the Tea party groups, and to them, defeating the Main Street Fairness Act is one of the priorities.
In the state, the leader of one of the largest tea party groups, Joan Fabiano even sent an email to call for various parties and groups to come together for the same goal – say NO to internet sales tax. According Fabiano, one thing that should be considered is tax fairness, and not an increase in tax. He said that for a new form of tax to be introduced, another tax plan should be eliminated or have its rate reduced to create a ‘revenue neutral’ for the millions of taxpayers.
Tax Collection System
According to the state Department of Treasury, it would be impossible to collect $482.4 million in sales and use taxes, with ecommerce accounting for more than 60% of the amount. It is expected that use taxes would be levied on goods bought through a mail-order catalog or out-of-state. The K-12 education is funded by about 73% of sales tax revenues, while another 10% goes to the townships and cities and 17% to the state general fund.
For Michigan, about $5.9 million was generated through voluntary tax declaration by about 110,000 taxpayers, and according to the House GOP, the families in Michigan have already been subjected to enough tax, and another 6% on e-commerce purchases might hurt businesses.