The Senate voted Monday to allow states to assess a sales tax on purchases from Amazon.com, eBay and other online retailers in a bipartisan measure that would also reduce the increase planned for Maryland's gas tax.
The bill, which passed 69-27, would resolve a long-standing complaint of brick-and-mortar business owners, who say they struggle to compete with online companies that don't charge sales tax. The legislation requires Internet sellers to collect sales tax and send that money back to state treasuries.
- Commentary: Pricing, not sales tax, will determine retailers' success
- Commentary: Sales tax on the Internet is just another unnecessary tax
- Commentary: Internet sales tax is good for Md. business
- Maryland's 2014 candidates for governor [Pictures]
- General Assembly 2014 session [Pictures]
- Baltimore City mayors through the years [Pictures]
See more photos »
- E-Commerce Industry
See more topics »
The measure would have an additional effect in Maryland: If approved, it would reduce by about 7 cents a 20-cent increase on gasoline that was approved this year by the General Assembly.
"Maryland businesses aren't looking for special treatment but simply a fair way to compete against large Internet sellers who charge similar prices but get away without collecting sales tax," said Sen. Ben Cardin, a Maryland Democrat and co-sponsor.
Supporters hope the bipartisan vote in the Senate will help ease the bill's path in the GOP-led House of Representatives. Despite support from such high-profile Republicans as New Jersey Gov. Chris Christie, its prospects remain uncertain.
Some online businesses, including eBay, say the measure would be unwieldy for sellers, requiring them to keep track and apply varying tax rates depending on the home state of the purchaser. They also point out the bill would mean consumers who shop online would pay more in taxes.
"I do not believe the [bill] is sufficiently simplified yet," House Judiciary Committee Chairman Bob Goodlatte, a Virginia Republican, said in a statement. "While it attempts to make tax collection simpler, it still has a long way to go."
The Obama administration supports the bill and has indicated the president would sign it.
Maryland businesses are required to collect a 6 percent sales tax on many goods, generating about $4 billion annually for the state. But online retailers that do not have a physical presence in the state do not have to collect it. Online shoppers who purchase an item across state lines are supposed to notify the state and volunteer to pay the tax, but they rarely do.
State officials estimated earlier this year that a similar online sales tax proposal would have brought about $173 million a year in new revenue to Maryland. The Senate bill exempts purchases from businesses that earn less than $1 million annually from out-of-state sales.
The Marketplace Fairness Act, as it is known to supporters, would allow the state to begin collecting sales taxes about 90 days after being signed into law. Maryland Comptroller Peter Franchot has said that he, too, supports the federal legislation.
In Maryland, the General Assembly passed legislation this year to increase the state's 23.5-cents-a-gallon gas tax about 20 cents by mid-2016. But if the federal government allows the state to apply its sales tax to Internet retailers, motorists could be spared about 7 cents of the gas tax increase, General Assembly officials have estimated.
Maryland's other senator, Democrat Barbara A. Mikulski, also supported the bill.