Florida TaxWatch Testifies in Support of SB 50 (Sales and Use Tax)
TALLAHASSEE, Fla. – Today, comments from Florida TaxWatch President and CEO Dominic M. Calabro were delivered to the Honorable Ed Hooper, Chair, and members of the Senate Commerce and Tourism Committee in support of SB 50 (Sales and Use Tax).
The proposed legislation follows the U.S. Supreme Court’s 2018 ruling (South Dakota v. Wayfair, Inc.) that states can apply reasonable requirements for remote vendors to collect sales and use taxes on sales to residents even if the vendor does not have a physical presence in the state. Currently, Florida is one of only two states that has not taken the steps to implement these requirements. Not collecting sales taxes on remote sales not only costs Florida governments millions in legally owed revenue, it also puts Florida retailers at a competitive disadvantage, distorts purchasing decisions, is unfair to Floridians that do pay the tax, and makes millions of Floridians – often unwittingly – lawbreakers.
“The issue here is not one of revenue or adding a new tax – because the tax is already owed under current law – but one of shifting the burden of collecting the taxes on remote sales from hard-working Florida consumers to where it belongs – out-of-state retailers. Legislation, such as SB 50 by Sen. Joe Gruters and HB 15 by Rep. Chuck Clemons, can remedy this longstanding problem,” said Calabro.
See full testimony below, and read more about Florida TaxWatch’s work on this issue on page eight of the 2020 report entitled, “Bringing Florida's Budget Back From COVID-19: A Roadmap to Recovery” and the 2019 Session Spotlight: E-Fairness.
Comments to the Honorable Ed Hooper, Chair, and Members of the Senate Commerce and Tourism Committee regarding SB 50 – Sales and Use Tax
My name is Dominic M. Calabro and I am President and CEO of Florida TaxWatch, an independent, nonpartisan, nonprofit taxpayer research institute & government watchdog which, for 40 years, has worked hard to improve the productivity and accountability of Florida government and promote a fair and equitable system of taxation.
After being viewed as unconstitutional for many years, the U.S. Supreme Court (South Dakota v. Wayfair, Inc.) in 2018 ruled that states can apply reasonable requirements for remote vendors to collect sales and use taxes on sales to residents even if the vendor does not have a physical presence in the state. Florida is one of only two states that has not taken steps to implement the collection and remittance of sales taxes by remote sellers in the wake of the U.S. Supreme Court decision. Millions of Floridians are now subject to collection action by the state (e.g., auditing, fines, and penalties) even though many are unaware. The issue here is not one of revenue or adding a new tax – because the tax is already owed under current law – but one of shifting the burden of collecting the taxes on remote sales from Florida consumers to where it belongs – out-of-state retailers.
By not collecting sales tax on these remote sales, Florida’s state and local government miss out on legally owed revenue. In 2019, before the COVID-19 virus’ impact, the Florida Revenue Estimating Conference found that not collecting sales tax on remote sales tax costs Florida state and local governments around $612 million a year, a figure that will grow to $870 million annually in five years. With the COVID-19 virus leading to a surge in online sales, these estimates likely underestimate the true value of missed remote sales tax revenue.
For the Retail Trade industry, enacting E-fairness legislation helps prevent unfair competitive disadvantages both for sales conducted through brick-and-mortar stores in Florida and when selling into other states that have enacted E-Fairness. Not collecting sales taxes on remote sales not only costs Florida governments millions in legally owed revenue, it also puts Florida retailers at a competitive disadvantage, distorts purchasing decisions, is unfair to Floridians that do pay the tax, and makes millions of Floridians – often unwittingly – lawbreakers.
Florida TaxWatch supports the enactment of legislation to require marketplace providers and out-of-state retailers with no physical presence in Florida to collect state and local sales tax on taxable items delivered to purchasers in Florida if the seller makes a substantial number of sales into the state. Legislation, such as SB 50, can remedy this longstanding problem. This is about tax system modernization. The Supreme Court has finally empowered the state to modernize this important revenue stream while also removing a barrier to competition previously imposed on Florida-based businesses. Florida must take advantage of this opportunity. We look forward to working with you and your colleagues as this issue is addressed.
About Florida TaxWatch
As an independent, nonpartisan, nonprofit government watchdog and taxpayer research institute for more than forty years and the trusted eyes and ears of Florida taxpayers, Florida TaxWatch works to improve the productivity and accountability of Florida government. Its research recommends productivity enhancements and explains the statewide impact of fiscal and economic policies and practices on citizens and businesses. Florida TaxWatch is supported by its membership via voluntary, tax-deductible donations and private grants, and does not accept government funding. Donations provide a solid, lasting foundation that has enabled Florida TaxWatch to bring about a more effective, responsive government that is more accountable to, and productive for, the citizens it serves since 1979. For more information, please visit www.floridataxwatch.org.