Sen. Joe Gruters’ online sales tax proposal could secure around $670 million in new revenue, according to state budget experts.
The bill (SB 126) requires internet retailers and online marketplaces to collect state sales tax on items delivered within Florida. The Sarasota Republican has said the effort to balance the playing field for Florida businesses would generate more than $700 million for the state.
That guess remains in the ballpark of what the Legislature’s Office of Economic and Demographic Research (EDR) found Friday, EDR coordinator Amy Baker said. In the estimating conference, budget experts made revisions to its methodology.
The office’s estimate will not be finalized until next week, still ahead of any changes it might make during the 2020 Legislative Session.
But one reason for the disparity remains set. More internet retailers are voluntarily collecting sales taxes than when the bill, now a Senate priority, was first filed.
The EDR found that only 69 of the top 500 internet retailers do not collect Florida taxes, creating a potential $110.8 million new revenue pool. More businesses collecting sales tax and better data allowed the office to drop the estimate from $145.4 million.
And the EDR’s preliminary estimates for next Session suggest that taxing online marketplaces — like Amazon, eBay and Walmart — could rake in more than $500 million. The industry’s rapid growth, about 15% annually, will balloon that figure in the coming years.
Without the provisions in Gruters’ bill, Florida is not only missing out on possible revenue. In-state businesses are disadvantaged because consumers are paying their taxes in the store.
“This may not save them, but certainly we should not be giving out-of-state corporations an advantage over local businesses who are paying taxes,” he said.
And according to state law, consumers still have to pay sales taxes whether or not the business collects it.
“What we’re doing is we’re taking law-abiding citizens and turning them into criminals every single day,” he said.
Critics have pushed back against the Senator’s proposal, calling it a tax increase. But Florida and Missouri are the last two states that collect sales tax which have not implemented online taxes. And Missouri is set to do so soon.
“We’re just behind the times,” he said. “It’s not a tax increase.”
A 2018 U.S. Supreme Court case found that states can charge online sales taxes, which led Gruters to file a bill (SB 1112) in this year’s Session. It died in the Appropriations Committee before receiving a Senate-wide vote.
That bill was partnered with an effort to offset the new revenue with tax exemptions. But next year, Gruters wants to let Gov. Ron DeSantis, Senate President Bill Galvano and House Speaker José Oliva decide where to put the potential funds, such as to cover teacher pay raises.