A new push to implement a sales tax on Internet sales is taking place at the Federal level.
Last week, members of both parties sponsored legislation that would place Internet companies on the same playing field as local businesses.
Reuters reported that in the last decade, Internet sales have gone up from 1.6 percent of all U.S. retail sales to more than five percent according to the Commerce Department. In the third quarter of 2012, Internet sales were reported at $57 billion.
The move toward implementation at the Federal level is welcome news to Rep. Pat Ownbey (R-Ardmore), who attempted to pass a bill through the state house in 2012.
“I carried a bill last year that nearly made it through the House,” Ownbey said. “The problem for me is that it is unfair for the businesses in the state. If you are not in Oklahoma, you don’t charge a sales tax and if you are an investor in the state, you are penalized.” Local businesses find it harder to compete as items purchased online are cheaper without the sales tax added. Ownbey said that legally, people are responsible to pay a use tax but there is no way of enforcing it.
“Oklahoma received several million dollars each year through people paying the tax,” Ownbey said. “I know people think it is an additional tax but by law, you are supposed to pay a use tax but it is not enforceable. Ironically, people do actually pay the tax, but it is a small percentage.
”Currently, states can only tax Internet sales made by companies that have a physical presence online according to the Reuters report. Ownbey said companies are able to get around the loophole by hiring agents to deliver packages.“The states have been looking to the Federal Government for help on this,” he said.
At the local level, there are concerns about the sales tax money going to the correct place. In rural Oklahoma, there are a number of municipalities that are under a zip code of a different municipality. For example, the majority of Lone Grove has an Ardmore zip code.
“My concern is 70 percent of Lone Grove has an Ardmore zip code, which is the number that came from the Lone Grove Postmaster,” Mayor Chris Young said. “The post office even has an Ardmore zip code.
“I think this needs to pass, there is no doubt about it. And I will take 30 percent rather than nothing but we would like 100 percent. It is for police protection, fire protection, it is everything the community needs for support. And we are not the only community that has this problem.”
Young said the city has contacted Rep. Tom Cole’s (R-Okla.) office as well as Sen. Tom Coburn’s (R-Okla.) with concerns and Cole’s office confirmed that it is looking into the situation.
“Since they are trying to get this taxed, we would like to see this situation get fixed,” Young said.