RICHMOND
--A House subcommittee this week killed a bill to force big online retailers to collect and remit Virginia sales tax to the state.The bill, known around the Capitol as the "Amazon bill," would have required online retailers with a presence in Virginia to collect the tax. Currently, the law says online shoppers should send the sales tax on their purchases to the state, but few do.
Sen. Emmet Hanger's bill passed the Senate, but a subcommittee of the House Finance Committee tabled it this week after a lengthy debate.
Supporters of the bill said that online retailers have an advantage over brick-and-mortar stores because they don't have to collect sales tax.
"The sales tax issue is just one edge they had over us," said Brenda Seward, who owned a bookstore in Ashland till she closed it last month.
Danny Givens, of Givens Books in Lynchburg, said he has people come into his store, compare his prices with the same item online, and leave if he can't discount his item to the online price.
Hanger said the state could collect millions of dollars more in revenue if it made online retailers collect the sales tax--money the state could use in the current down economy.
But opponents of the bill said it would do nothing to the big retailers, while it would hurt small Web sites that make money through partnerships with big companies like Amazon. They said the big online retailers would just sever those partnerships.
Del. Tim Hugo, R-Fairfax, the subcommittee chairman, said the bill could have driven more than 5,000 Virginia Internet-based retailers out of business.
Several delegates told Hanger they support the idea of enforcing the sales tax on Internet purchases but weren't sure his bill would solve the problem.
Hanger said he will try to tackle the issue again next year.
The Senate's budget proposal includes language incorporating Hanger's bill but doesn't seem to appropriate any revenue expected from it.
Retailers also watched with interest last weekend as the House and Senate money committees unveiled their budget proposals.
Retailers were watching for changes to several tax changes affecting them that were proposed by former governor Tim Kaine in his own budget proposal last December.
One of Kaine's proposals would have eliminated the "dealer discount," which allows retailers to keep a percentage of the sales tax in return for collecting and remitting the tax to the state. Kaine said that would get the state another $61 million a year, as he sought to make up a $4 billion budget shortfall.
Retail groups did not like that provision.
The Senate budget did not change Kaine's proposal for now but does include language "expressing the intent" that the elimination of the discount is temporary, and directing the tax commissioner to study ways to compensate retailers for collecting sales tax.
In the House, delegates suggested tweaking Kaine's plan. The House proposal would eliminate the discount for retailers who remit sales tax electronically, estimated to only be 1,705 retailers, about 2 percent.
For the rest, the House plan would halve discount compensation. The result is that the House plan brings the state $46 million a year.
The House budget also eliminates other fees proposed by Kaine, some of which affect businesses, such as a restaurant permit fee, a weights and measures fee, an increase to boiler inspection fees, and an increase in recordation fees.
Neither budget changes Kaine's proposal on the "accelerated sales tax," something retail groups opposed.
The accelerated sales tax requires retailers to remit their June sales tax on June 25, which is early--and puts that revenue on the books
Chelyen Davis: 540/368-5028
Email: cdavis@freelancestar.com