Mr. President, I rise today to express my concerns with the Customs Conference Report. While I support the Customs provisions in this conference report as well as the Internet tax moratorium, I cannot support the way that these issues were merged in conference.
I’ve said for years that ITFA should be paired with eFairness legislation because I think it’s reasonable to tell states that when we take away their ability to tax internet access, we are giving them the ability to collect state and local sales and use taxes on remote sales.
It is beyond time for Congress to give States that right. Congress’ failure to act has created a burden on our states and local governments, which are losing billions in tax revenue that they need for local responsibilities.
As a former mayor and state legislator, I understand how important sales taxes revenue is to state and local governments for maintaining schools, fixing roads, and supporting local law enforcement, fire departments and emergency management crews. Congress’ inaction on eFairness legislation implicitly blesses a situation in which states may be forced to raise other taxes - such as income or property taxes - to offset the growing loss of sales tax revenue.
To be clear Mr. President, we are talking about a substantial loss in revenue. In 2012, states missed out on an estimated $23 billion in uncollected use taxes from all remote sales. About $61 million of that would have gone to my home state of Wyoming. And those numbers increase every year. States missed the opportunity to collect an estimated $26 billion in remote sales and use tax revenue in 2013. Wyoming lost out on an estimated $81.2 million that year.
Congress’ failure to act is also hurting our brick and mortar stores that are required to collect state and local sales and use taxes while their online and catalog competitors are not. As a former small business owner, I believe it is important to level the playing field for all retailers – in-store, catalog, and online – so an outdated rule for sales tax collection does not adversely impact small businesses and Main Street retailers.
But Mr. President, this issue also affects online stores. More and more states are implementing their own laws to ensure they can collect remote sales and use taxes. This will create a patchwork of complicated, uniquely tailored, and incongruent laws for all businesses to comply with.
For many years, I have worked with all interested parties to find a mutually agreeable way to solve this problem. But instead of taking up legislation that prevents taxation of internet access and also helps state and local governments and businesses, we have a conference report before us that includes the air dropped Internet Tax Freedom Act, which the Senate has not considered in Committee or on the floor.
Instead of considering ITFA now, we should have combined it with legislation that restores states' sovereign right to enforce state and local sales and use tax laws. What I am proposing is NOT a tax on the internet. Rather, eFairness legislation would give states the option to collect the sales and use taxes due on all purchases. Unlike the air-dropped ITFA provision, the Senate has overwhelming voted in support of eFairness, with a bipartisan group of 69 senators supporting the Marketplace Fairness Act in the last Congress.
I want to thank my colleagues who have worked so hard on this issue, especially Senators Durbin, Alexander and Heitkamp. I want to thank the businesses, trade groups, state and local governments, and all the other stakeholders who have helped us educate offices about this issue. And, I want to thank the Leader for listening to our concerns about this conference report.
But ultimately, Mr. President, I must oppose the conference report because, while Congress should pass the Customs bill and ITFA this year, Congress should also pass eFairness legislation this year that allows states to collect the sales and use taxes they are owed for remote sales. I yield the floor.