Is it a Tax Hike? Doesn't Matter, It's A Good Idea

Under The Hood

Don’t call it a tax hike, it’s been here for years.

That’s the message Sen. Joe Gruters, R-Sarasota, delivered in his long quest to require online retailers to collect sales taxes on purchases. It’s a mission he may well complete soon thanks to the economic crisis that accompanied the COVID-19 pandemic.

It’s been Gruters’ top legislative priority for three years running, ever since the Supreme Court’s South Dakota v. Wayfair ruling made clear states can charge taxes on e-commerce. In 43 states, lawmakers jumped at the chance, but Florida remains a holdout. The matter typically falls victim to a standard Tallahassee dynamic, where the deliberative Senate greets an issue with warmth but a reactionary House leaves legislation to freeze in the Panhandle frost.

This year, legislation appears to be moving. Speaker of the House Chris Sprowls and Senate President Wilton Simpson just endorsed Gruters’ bill so long as revenues go to replenish the state’s sapped unemployment trust.

In the world of policy, crises bring opportunity, and the coronavirus created the perfect conditions to pass Senate Bill 50. Fear of an airborne virus drove many consumers last year to move their shopping habits online. Guidelines and lockdown regulations stopped the type of gatherings retail areas have come to rely upon to spur activity; think of the loss downtown stores felt when the Sarasota Farmers Market ceased from March until August.

At the same time, the pandemic forced massive layoffs and a depletion of a trust fund through a crushing number of claims. That triggered a tax hike on businesses already facing an unexpected recession, and if the fund stays low more increases will come automatically.

Gruters’ legislation for the first time already cleared all its Senate committee stops, but his plan never faced serious opposition in that chamber. The more remarkable event this week came when companion legislation from Rep. Chuck Clemons, R-Newberry, had a hearing in a House committee for the first time. It received a favorable vote, and seems destined for passage.

But Gruters must now game the rhetoric. He’s been adamant for years this should not be viewed as a new levy. “I would never support a tax increase,” he said. Floridians were always legally required to pay this tax. As a practicing CPA, he’s had to explain this to clients who get audited and learned only then of a requirement for citizens to pay this sales tax independently to the Florida Department of Revenue and pay taxes on all their online purchases.

What, you’ve never done this? Nobody does, and that’s where this gets politically dicey. The Legislature’s revenue estimators predict a huge windfall should the state begin collecting online sales taxes— almost $974 million next fiscal year and over $1 billion the one after that. Pretty good trick without raising taxes.

The House Committee this week for the first time featured critics of the plan using language Gruters always eschewed. Rep. Anthony Sabatini, R-Howey-in-the-Hills, said his constituents define a tax hike differently from Tallahassee. Their definition is “government taking more money from somebody than they did before.”

And frankly he’s got a point. While Gruters’ definition will avoid a requirement of a supermajority vote in the Legislature for new taxes, critics will malign this as a billion-dollar tax on consumers. It’s already started. It’s a bit of a farce for the Legislature to bill this as revenue neutral for stopping an unemployment tax hike. The claims crisis is temporary. The sales tax will be in place forever.

But Gruters remains on the side of angels here. It’s immoral Florida for years charged customers at Bookstore1 a tax those shopping on Amazon never paid, even as the online retailer nearly annihilated the entire independent bookstore sector. Every merc-ant whose livelihood depends on what goes into a register instead of a PayPal account will decry the inequity of online merchants evading sales tax. It’s more egregious now that those selling both in person and through e-commerce must pay sales tax if they ship goods to 43 states, but websites selling goods to Floridians don’t pay any sales tax here.

This is a tax Florida should have charged the last 20 years.

Jacob Ogles is contirbuting senior editor for SRQ MEDIA.

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