2016 Legislature may try to force feds to take action on Internet sales tax

2016 Legislature may try to force feds to take action on Internet sales tax

(Chelsey Allder/Deseret News/File)


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SALT LAKE CITY — An attempt to force the collection of sales taxes on online purchases could be a way for the 2016 Legislature to bolster the sagging revenue source.

The proposed legislation described at a Utah Taxpayers Association conference Monday by Sen. Curt Bramble, R-Provo, is part of a national effort to bypass previous court decisions limiting the ability of states to collect sales taxes.

Bramble, the president of the National Conference of State Legislatures, said the organization has adopted a plan for lawmakers around the country to push similar legislation with the intention of making Congress take action.

Even if that's ultimately successful, however, Bramble said the estimated $80 million to $300 million or more that's owed annually in Utah would be offset under an existing state law requiring the sales tax rate to be reduced.

"We're not looking for a windfall of new money. What we want to do is shore up the base we've got," Bramble told the dozens of business, government and community leaders gathered for the annual prelegislative conference.

He and other legislative leaders, including Senate Budget Chairman Lyle Hillyard, R-Logan, said Utah needs to deal with what's being called an erosion of the sales tax base, which makes up the bulk of the state's general fund.

Online sales are a big part of the slowdown in sales tax growth. Bramble said while Utahns are required to remit the sales taxes they owe from shopping on the Internet on their state income tax returns, they paid only about $200,000 last year.

Currently, only companies with a physical presence in a state where a purchase is made have to collect sales taxes. An effort by Rep. Jason Chaffetz, R-Utah, to change that requirement apparently has been blocked.


We're not looking for a windfall of new money. What we want to do is shore up the base we've got.

–Sen. Curt Bramble, R-Provo


Bramble said ensuring that sales taxes are collected on everything sold online is an attempt to broaden the sales tax base in a "truly conservative fashion," by lowering the rate.

"I think that's an issue we need to address as a state," Hillyard said of slowdown in growth of sales taxes, about $39 million less than anticipated in the past and current budget years.

The budget chairman said exempting food purchases from the state sales tax have hurt the stability of the base. But he said later he does not expect action to restore that tax in an election year.

The only potential increase raised during the conference was imposing a tax on e-cigarettes to help pay for extending traditional Medicaid coverage to a limited number of Utahns earning below the federal poverty level.

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That option, Senate President Wayne Niederhauser, R-Sandy, said, has been projected to cost more than accepting the Medicaid expansion available under President Barack Obama's health care law.

"My gut feeling is the state's budget risk is a lot less," Niederhauser told the conference.

GOP lawmakers have rejected attempts by Gov. Gary Herbert to come up with a state plan to use the money available for Medicaid expansion.

During the 2015 Legislature, lawmakers agreed to a gas tax increase amounting to 4.9 cents a gallon that took effect on Jan. 1. They also raised property taxes $75 million to fund schools.

Niederhauser said he wasn't sure Utahns would see collecting sales taxes on all online purchases as a tax increase.

"I don't know if they will or they won't because it really isn't. … Really, what should happen is we should not be losing that revenue," he said, because the law already requires Utahns to declare what they owe on online purchases.

"But nobody does that," Niederhauser said, "and it's hard to enforce."

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Lisa Riley Roche

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