* Bill gives states power to compel online sales taxes
* Anti-tax activist Norquist vows to fight effort in House
By Kim Dixon and Lisa Lambert
WASHINGTON, April 25 (Reuters) – The U.S. Senate on Thursday
voted to move forward with legislation that would allow states
to force retailers to collect online sales taxes, though the
measure lost supporters after opponents stepped up lobbying this
week.
The bipartisan proposal cleared a procedural hurdle after
63 members in the 100-seat Senate backed it; the measure
previously was held up by opponents. Critics largely cited
potential burdens on small businesses, many in states that do
not impose sales taxes.
Earlier this week, nearly three-quarters of Senators backed
the measure, suggesting lobbyists – including online retailer
Ebay and the financial industry – were successful in changing
lawmakers’ minds.
A final vote on the legislation had been expected this week
but was pushed back to the week of May 6.
At issue is the ability of states to collect taxes from
online merchants without a physical presence within their
borders.
The bill would extend states’ authority to require retailers
to collect tax outside their physical borders, though it would
not require states to do so. It would exempt merchants with
online annual out-of-state sales of $1 million or less.
The legislation faces much tougher odds in the
Republican-controlled U.S. House of Representatives, where some
Republicans view it as a tax increase.
OPPONENTS STEP UP LOBBYING
Anti-tax activist Grover Norquist told signers of his
anti-tax pledge that supporting an online tax would be
tantamount to reneging on their promise not to raise income
taxes.
He was on Thursday plotting a strategy to stop the bill’s
momentum in the House.
“You do this new thing where you start to make it easy for
people to tax across state lines,” Norquist told Reuters in an
interview, saying the legislation could lead to states pushing
to collect income and other taxes beyond their borders.
Norquist said Republicans will introduce an amendment to
limit the legislation, to “smoke out the advocates of exporting
taxes across state lines,” he said.
Backers say the measure explicitly rules out new taxes and
only applies to sales taxes. The nonpartisan Congressional
Budget Office said the legislation will have no impact on the
federal budget deficit.
Opposition is led by eBay, whose chief executive has been
encouraging its millions of users to oppose the effort.
Financial firms also weighed in this week against the
measure, worried that it would give states new authority to
impose taxes on financial transactions over the Internet.
Opponents also include Democratic Senator Max Baucus, the
chairman of the Senate Finance Committee. His fellow Democrats
are bypassing his panel to bring the measure straight to the
Senate floor.
Supporters of the measure include brick-and-mortar retailers
such as Wal-Mart Stores Inc and Best Buy Co Inc
and cash-strapped state governments, including the National
Governors’ Association.
