As supporters of a bill to boost online sales tax collection gear up to pass the measure in the lame duck, opponents say leaders will likely avoid a tax debate in the waning months of this session.
“There’s a lot to pressure to minimize contentious issues at that point in time,” said Daniel J. Mitchell, a senior fellow at the Cato Institute.
State and local government associations have been salivating at the chance to collect taxes from out-of-state online vendors, who they say rob them of billions in revenue each year.
The Senate passed a bill, the so-called Marketplace Fairness Act, last year that would allow states to collect sales taxes on items delivered to customers in their state. After the bill languished in the House for nearly a year, sponsor Sen. Mike Enzi, R-Wyo., combined it with a popular House-passed measure extending a moratorium on taxing Internet access.
Congress extended the Internet access tax moratorium under the government’s stopgap funding bill through Dec. 11, at which time the Senate could take up Enzi’s new proposal (S 2609).
“We know the House is interested in passing a continuation of the moratorium,” said Dan Crippen, executive director of the National Governors Association. “And so, what the Senate is essentially saying is that this is a more complete e-commerce bill and addresses both issues at once.”
It may not be as simple as that, Mitchell said. With several other pressing matters on the agenda for the lame duck, any procedural roadblocks on the tax issue could force leaders to delay action until next year.
Some senators also indicated they may support the measure if they had more time to debate the issue, including Sen. Orrin G. Hatch of Utah, ranking Republican on the Senate Finance Committee.
“I think the bill is well-intentioned and I’m not fundamentally opposed to it,” Hatch said on the floor, before the Senate passed the Marketplace Fairness bill last year. “But, make no mistake, there are problems with this legislation as it is currently drafted; problems that likely could have been avoided if the Finance Committee had been given an opportunity to fully consider the bill.”
If Republicans take control of the Senate in November, Hatch could have more sway in getting the bill to the floor. For now, Finance Chairman Ron Wyden, D-Ore., is among those from states without sales taxes who are expected to try and keep the issue separate from the access tax moratorium.
“Sen. Wyden is going to do whatever it takes to preserve the Internet Tax Freedom Act, including making sure people understand that [the Marketplace Fairness Act] violates the animating principle of ITFA,” Wyden spokesman Keith Chu said in an email.