INDIANAPOLIS (AP) — A state senator plans to ask his Statehouse colleagues
Thursday to help him lobby Congress for the right to tax online sales.
Sen. Luke Kenley, R-Noblesville, said this week he will pitch state
lawmakers on the need to apply the state sales tax to online retailers. He
estimates taxing online sales could net the state up to $400 million
annually, but said it is as much about putting online retailers on the same
playing field as traditional merchants.
"Our bricks and mortar retailers are being put at a huge disadvantage in
this system,” Kenley said. The state levies a 7-percent sales tax on most
goods, giving online retailers a sizable advantage.
But the change will have to go through Congress. That is why Kenley said he
will ask members of the Legislature’s Commission on State Tax and Financing
Policy to help him lobby Indiana’s congressional delegation for the change.
Indiana Retail Council President Grant Monahan says state lawmakers could
make an immediate gain by rewriting state law to apply the tax to
Seattle-based online giant Amazon.com. Monahan said Tuesday the state can do
this without waiting on the federal government because Amazon operates
distribution centers in the state.
“We support that tax for all online retailers across the country, but apart
from all that I believe that Indiana can do something now,” he said.
Companies he represents with bricks and mortar operations collect sales
taxes on online purchases, too, and send them to the states where the buyer
had the merchandise shipped, Monahan said. Their “physical presence” in a
state mandates they charge and collect the tax.
An Amazon spokeswoman said Wednesday she would rather see the issue
addressed by Congress than state by state.
“We believe the sales tax issue needs to be solved at the federal level and
we’re actively working with the states, retailers and Congress to get
federal legislation passed as soon as possible,” Amazon spokeswoman Mary
Osako wrote in an email response to questions.
Amazon operates three distribution warehouses in Indiana and announced in
July it plans to open a fourth in the state.
A 1992 Supreme Court ruling effectively barred states from collecting taxes
from most online operations. Kenley is president of the national group
lobbying Congress for a new law. He is hoping the measure makes it into the
package being crafted by the deficit reduction committee, thus giving it a
better chance of approval by the frequently gridlocked Congress.
The Senate’s second-ranking Democrat, Illinois Sen. Dick Durbin, is
sponsoring the Senate measure. But some Republicans, including many of the
freshmen members who have signed anti-tax activist Grover Norquist’s pledge,
are skittish about signing on with anything that may be seen as a tax hike,
“The solution is in the hands of the U.S. Congress,” Kenley said. “We could
pass legislation until the cows come home and it is not going to solve the