Internet sales tax loophole irks local leaders

Some small-business leaders here describe competing with online retailers as fighting with one arm tied behind their backs.

West Pasco Chamber of Commerce President Joe Alpine continues to complain about how local firms must collect the state sales tax, while online transactions often skip the sales tax.

The chamber passed a resolution "to end the Internet sales-tax loophole," Alpine reports. The document was sent to the Florida Alliance for Main Street Fairness.

Lawmakers, however, have been slow to take up the cause. Some state legislators believe the jurisdiction over taxation of online retailing should belong to the federal government. Election-year politics seems to have crowded out the issue so far.

Florida sales tax does apply to Internet sales, state Rep. John Legg, R-Port Richey, pointed out in a previous interview.

Court decisions, however, potentially have made Internet sales-tax enforcement difficult, Legg observed. A patchwork of sales tax rates among states complicates matters as well.

A downtown New Port Richey merchant, Rob Marlowe of GulfCoast Networking, also has advocated some type of federal clearinghouse to simplify the collection of sales tax on out-of-state transactions.

Marlowe, a New Port Richey City Council member, lamented the "disparity" in vying with online retailers for local customers.

He has to charge the 7 percent sales tax on the things he sells, but Internet-based businesses don't.

Nevertheless, Marlowe is concerned that paperwork could overwhelm him if he had to track sales tax rates for all 50 states.

Local stores wind up acting as showrooms, according to Alpine. Some shoppers look over a product at local stores and then buy the item online to avoid paying sales tax, he believes.

"It needs to be an equal playing field," Alpine said. "Those small businesses invest in our community."

Advocates of Internet sales taxes say the extra revenue could help close the gap in Florida's budget shortfall, expected to be about $2 billion this fiscal year.