Bill requiring online retailers to pay Virginia sales tax sails through state Senate

Va. Senate OKs sales tax bill for online retailers

RICHMOND, Va. — A bill that would require global online shopping giants such as Amazon to start collecting and paying Virginia sales taxes won easy Senate passage Tuesday.

The Senate voted 28-12 to advance to the House a bill intended to collect millions of dollars in lost revenue at a time when the state faces a $4 billion shortfall.

Sponsor Emmett Hanger argued that struggling owners of so-called “brick-and-mortar” stores are struggling and shouldn’t have to compete with monied multinationals who ignore state taxes.

“They’re being undercut by businesses that don’t pay sales taxes, and that flaunt it,” said Hanger, R-Augusta, noting that their Web sites entice customers to avoid the 5 percent tax.

While sales have been flat or worse for traditional retailers who have to pay the tax, Hanger said, multinational Internet sales behemoths have seen profits soar, Hanger said.

“And that is a significant amount of revenue that Virginia is losing and we should be getting part of that,” Hanger said.

Opponents, however, said the bill would have no effect on the major global online retailers it attempts to target. Instead, it would devastate small, Virginia-based online businesses who form alliances with the major companies, said Sen. Mark Herring, D-Loudoun, whose district includes the Dulles headquarters of AOL.

Faced with the requirement to pay Virginia taxes, Herring said, large online retailers will merely stop doing business in Virginia, severing their partnerships with small businesses in the state that had relied on them.

“Has Virginia’s economy not contracted enough? Do we need it to contract even more,” Herring asked? “This is an issue that needs to be addressed in Congress, not here.

The bill benefited from support by many Republicans who are strident opponents of higher taxes. One was Sen. Steve Martin, R-Chesterfield.

“I do not see this as a tax increase,” said Martin, among the Senate’s most conservative members. “This is an equity issue. This is an issue of trying to ensure that those who comply with existing law can compete with those who do not.”