A new UtahPolicy poll shows Utahns are split over whether online retailers should have to remit sales taxes collected from buyers, and in return the Utah state sales tax is reduced so there is no general tax increase.
Many Utahns may not realize that they are responsible for paying online sales taxes not charged by Internet retailers, like Amazon.
Currently, in most cases the online retailer collects the Utah sales tax from you at purchase if the retailer has a physical “nexus,” or a store, in the state.
But almost no online buyers bother to fill out what’s known as a “use” tax form and send in owed sales tax money to the Utah State Tax Commission.
It’s estimated that around $180 million is lost to state government each year in those lost sales taxes which are due, but uncollected.
For years, state Sen. Wayne Harper, R-Taylorsville, has been trying to find a way for the state to get those legally due taxes.
Now Rep. Mike McKell, R-Spanish Fork, is joining in the battle.
Pollster Dan Jones & Associates finds Utahns are split on the idea that as online out-of-state retailers are forced to pay Utah-owed state and local sales taxes, the overall state rate will be lowered.
Jones finds that among all Utahns, 40 percent favor such a new law; 50 percent oppose and 10 percent don’t know.
Way back in GOP Gov. Mike Leavitt’s administration of the 1990s, leading state officials have been complaining that not collecting online sales is unfair to local retailers.
The problem has only gotten worse since then.
It’s a common occurrence nowadays for shoppers to go to a local store – like BestBuy – shop for a new TV set, get the model number, and then go online to buy the product – not paying the Utah state and local sales tax, and perhaps getting free shipping, to boot. The practice is called “showrooming.”
HB235 by McKell has a zero fiscal note because, in steps, the state sales tax would fall from 4.7 percent to 4.4 percent as more people paid their online sales tax.
Harper’s SB182’s fiscal note says the state will take in an extra $1.5 million next fiscal year and a bit more the next year.
Local governments will take in an extra $666,000 a year.
And taxpayers – most of them Utah residents since the goods will be sent to a Utah address – will pay an additional $2.2 million in next fiscal year.
Both bills, in time, would “encourage” huge online sales firms, like Amazon, to pay Utah sales tax to the Utah State Tax Commission.
But it’s estimated that $180 million is owed annually to the state by Utah residents buying online products, but not paying the current 4.7 percent state sales tax.
The best solution, Harper and McKell say, is for Congress to act – and so all across the nation online retailers would be required to pay the state and local sales tax where the buyers are located.
In fact, U.S. Rep. Jason Chaffetz, R-Utah, has a bill that would basically do that. But Chaffetz has been unable to get fellow GOP congressmen to move on his legislation.
And, in truth, Congress has stalled any federal attempt to solve the issue in the recent past – thus leaving states having to put together a patchwork solution.
While McKell’s bill has no new money coming into the state coffers – for the state sales tax would be reduced — his fiscal note shows that local governments would get a combined $22.3 million for every $1 billion in online sales coming into Utah.
The natural argument against an online sales tax is that for online buyers – even though they owe the tax now – it would end up being a tax they are not paying currently, even if their state sales tax is reduced overall equally.
- Among Utah Republicans, 42 percent favor an online sales tax law like McKell’s, 46 percent oppose and 12 percent don’t know.
- Democrats oppose such a law, 53-41 percent with 8 percent don’t know.
- Political independents oppose such a law, 51-43 percent with 7 percent don’t know.
Jones polled 625 adults from Feb. 10-15, the poll has a margin of error of plus or minus 3.92 percent.