The U.S. House is set to consider legislation that would enact a sales tax on online purchases, a potential revenue stream that local government leaders across the country have long viewed as an untapped source of funds but which online retailers view as burdensome.
The legislation, called the Marketplace Fairness Act, passed the Senate in May with a 69-27 vote, and last week a House committee chairman released a set of principles on an Internet sales tax designed to guide further discussion on the issue. States now can only require retailers to collect sales taxes if they have a physical presence in their boundaries.
Researchers from the University of Missouri Truman School of Public Affairs’ Institute of Public Policy claim in a report released last year that the state of Missouri is missing out on $468 million annually that it could be collecting on online sales. The National Conference of State Legislatures estimates that figure to be closer to $430 million for the state’s 2012 fiscal year.
Columbia city government leaders have indicated support for taxing online sales for years, saying the new revenue stream could give a boost to the city’s discretionary general fund, which funds municipal services such as public safety that do not charge fees. Sales tax revenue makes up 27 percent of the city’s general fund.