Legislation in the U.S. Congress that would allow states to collect sales tax on Internet sales will not pass before the end of the year because of opposition from Speaker of the House John Boehner.
Boehner's opposition to the Main Street Fairness Act means the bill, which would allow states and local governments to collect sales taxes on Internet sales by businesses located outside their borders, will not pass during this session of Congress. Some supporters of the bill, which passed the Senate in May 2013, had pushed for Congress to pass the bill during a year-end congressional session beginning this week.
But Boehner has long opposed efforts to expand Internet sales taxes, said spokesman Kevin Smith.
"The speaker has made clear in the past he has significant concerns about the bill, and it won't move forward this year," Smith said by email Tuesday.
The House Judiciary Committee continues to work through Internet sales tax issues, Smith said.
Backers of an Internet sales tax could resurrect the legislation next year, although a new bill would have to start over in the legislative process in the new session of Congress.
Opponents of the bill say it would amount to a new tax on Internet shoppers, although many small businesses would be exempt from collecting taxes. A new tax collection system, covering potentially thousands of U.S. taxing jurisdictions, would also be costly for Internet sellers to set up, critics say.
Supporters of the legislation say current tax collection rules prohibiting out-of-state Internet sales taxes are unfair to brick-and-mortar retailers that are required to charge sales tax. The current system also costs states billions of dollars in lost revenue, they argue.The bill wouldn't impose new taxes, according to supporters. In most of the 46 states with sales taxes, online shoppers are supposed to report their online purchases to their home states and pay sales tax on them.
Instead of the sales tax bill, Boehner called on the House and Senate to work together to extend a moratorium on Internet access and transit taxes, which expires in mid-December. The House passed a permanent extension on Internet-only taxes in July, but some Democrats have questioned whether a permanent extension is warranted.
Congress has extended a temporary moratorium on Internet-only taxes multiple times since first passing it in 1998.
Generation Opportunity, a libertarian group aimed at so-called millennial young U.S. residents, praised Boehner for killing the sales tax measure. The group has asked members to contact lawmakers in opposition of the Marketplace Fairness Act.
The Internet sales tax is "Washington at its worst: a measure pushed by corporate lobbyists that would disproportionately harm millennials, who do much of their shopping online and use the web to create their own jobs," the group said in a statement.
Grant Gross covers technology and telecom policy in the U.S. government for The IDG News Service. Follow Grant on Twitter at GrantGross. Grant's email address is grant_gross@idg.com.
