Legislation that would force all internet-based businesses to collect local and state sales taxes passed the U.S. Senate on Monday, a bill that could bring Iowa millions of new tax dollars a year. Iowa Senator Chuck Grassley, a Republican, voted against the measure. Grassley counters those who say it would level the playing field so brick-and-mortar businesses could compete against online giants.
“It would, put do you want to put the small internet businesses out of business because they can’t abide by it?” Grassley asks. “It seems to me, that’s an important consideration as well.” Some business owners say it’s difficult to compete with online retailers which don’t have to collect the taxes.
A similar internet sales tax measure before Congress last year was touted as being able to generate 24-million dollars a year for Iowa, according to the Iowa Department of Revenue. Grassley says if the state wants those dollars, state legislators can act.
Grassley says, “Don’t forget, the state of Iowa has the capability of enforcing the use tax laws in collecting any of this money, if they want to.” The legislation, called the Marketplace Fairness Act, passed the Senate 69-to-27. It heads next to the House. Grassley isn’t optimistic about the bill’s chances of being enacted.
“There’s a lot of questions about how the legislation would work as a practical matter,” Grassley says, “questions about enforcement, even on foreign-based businesses and what kind of costs and administrative burdens it would put on businesses.” While Grassley opposed the measure, Iowa’s other U.S. senator voted for it.
Senator Tom Harkin, a Democrat, issued a statement saying the legislation would help businesses on Main Street. Harkin said: “It also means a more level playing field for our state and local governments, which are experiencing a loss of revenue that has to be made up with fewer services or higher property or other taxes.”
Governor Terry Branstad, a Republican, says he’d support passage of the bill. Even key internet retailers are on opposite sides of the issue — eBay is against it, while Amazon backs it.