Newspaper article THE JOURNAL RECORD

Oklahoma Governor Brad Henry Seeks Out-of-State Web Sales Tax

Newspaper article THE JOURNAL RECORD

Oklahoma Governor Brad Henry Seeks Out-of-State Web Sales Tax

Article excerpt

For Julie Hovis, buying a book over the Internet may be a good deal, but it's not necessarily a good idea.

Hovis, the co-owner of Best of Books, an independent bookstore in Edmond, has watched as hundreds of independent booksellers across the country have closed their shops. She's also seen other independent booksellers fight a losing battle against Internet- based companies such as Amazon.com or barnesandnoble.com.

She's fought the same fight.

And while Hovis believes part of the problem is the convenience factor, she said the fact that many Web sites such don't charge sales tax on purchases gives them an unfair advantage in the marketplace.

"I think it's a huge issue, not collecting taxes on things sold over the Internet," she said. "There's not a level playing field."

Hovis isn't alone.

Last week, Oklahoma Gov. Brad Henry announced he would push for legislation to force out-of-state companies to pay sales tax on items sold to Oklahomans via the Internet.

Henry announced the proposal - labeled as a compliance initiative - last week with the release of his 2010 executive budget, his plan to overcome a $1.3 billion hole in the state's budget.

The governor said his Internet-compliance initiative would generate about $95 million in tax revenue.

"The Tax Commission estimates that the state of Oklahoma loses $180 million per year on lost sales tax revenue from Internet sales," said Henry's chief budget negotiator, state Treasurer Scott Meacham. "The bad thing about the Amazon.coms and the Overstock.coms of the world is they are sort of like leeches, they suck the economic viability out of the state."

Those online merchants, Meacham said, give nothing back, but take economic activity that would otherwise be existing on Main Street in our communities and we earn no local or state sales tax on those sales.

The problem, Meacham said, is a nexus issue.

"It's an interesting phenomenon," Meacham said. "If you go to barnesandnoble.com and buy a book, the state of Oklahoma gets sales tax because they have a sufficient nexus with their stores here. If you go to Amazon.com and buy a book, then you don't pay sales tax."

Hovis agreed. She said some online merchants are chipping away at Edmond's tax base.

"I think when people buy online they just look at the bottom- line cost," Hovis said. "They don't think about how the tax revenue would support the ambulance service or the policeman."

Henry's proposal would change that.

"Currently out-of-state businesses without a presence in Oklahoma are not collecting sales tax on Internet, telephone or mail-order sales made to Oklahoma, effectively providing them with an advantage over Oklahoma-based operations that do collect sales tax," Henry's 2010 budget reads. "This compliance initiative allows the Oklahoma Tax Commission to pursue sales tax collection from out-of-state companies in question. …

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