An Idaho House panel rejected a plan to look into collecting sales tax on Internet purchases. Idaho loses an estimated $30 million dollars a year in tax revenues on Internet sales, according to a University of Tennessee study. If Idaho joined a multi-state agreement that’s tackling the issue, the state would need to simplify and change some parts of the state’s 6 percent sales tax. The Senate approved a similar proposal March 2.
The Streamlined Sales Tax Compact has support from 23 other states. The House Revenue and Taxation Committee Wednesday failed to move forward a plan letting the Idaho State Tax Commission look into joining the compact. Lawmakers rejected the plan on two separate votes. One that would have sent the plan to the House floor with the committee’s recommendation failed by a wide margin and a plan to send it on without a recommendation stalled after a tie vote. Democrats on the committee supported the plan on both votes. Republican votes were split, though leading Republicans, including House Majority Leader Mike Moyle, R-Star, and Rep. Scott Bedke, R-Oakley, voted no both times.
“One thing we cannot ignore is the growing volume of online… sales,” said Rep. Bill Killen, D-Boise. “It’s continuing to grow. There’s no indication that it will reverse itself.” He said the problem of Internet sales not being taxed will ultimately need a federal solution, but that joining the multi-state agreement could urge Congress to come up with a national standard.
Idaho likely won’t get there this year. Moyle told IdahoReporter.com that proposals for to join the compact looking for Internet sales, including the legislation approved by the Senate, are unlikely to move forward this session.
The House’s proposal included language saying that the streamlined compact couldn’t preempt state tax law, but lawmakers would need to make changes to meet the compact’s standards. Dan John with the tax commission said some of the changes would be small, including writing new definitions for soda, prepared food, and computer software. “A number of states exempt food (from sales tax), so they have to define prepared food and candy to pick up the nuances,” Johns told lawmakers. All those policy changes would need to be approved by lawmakers in the future if they want to fully join the compact.