Georgia lawmakers: Tighten internet sales tax collections

Georgia sets a deal with major online retailers in a move being watched by other states considering potential sources of tax revenue

(AP Photo/Jenny Kane)

ATLANTA — Georgia lawmakers have reached a deal to tighten sales tax collections by online businesses including Amazon, eBay and Airbnb.
The House and Senate both passed a conference report Thursday, sending it to Gov. Brian Kemp for his signature.
The measure would take effect April 1, meaning it would bolster revenues in the current budget year which ends June 30. It would also ease concerns over the next budget year. Lawmakers will begin writing that 2021 budget next week.
The measure is aimed at collecting sales taxes from third-party sellers whose commerce moves through online marketplaces. For example, Amazon lets third-parties use its platform to sell goods. Those sales may not be taxed now, but will be under the bill.
“There are no new taxes on anyone under this bill,” Senate Finance Committee Chairman Chuck Hufstetler, a Rome Republican, told lawmakers.
The House passed the bill 111-54, while the Senate passed it 40-9. Hufstetler said Kemp supports it.
Unlike some earlier versions of the bill, it doesn’t include an exemption for ride-hailing services such as Uber and Lyft. Uber is disputing whether its sales are taxable in Georgia. Hufstetler said this framework could apply to ride-hailing services, but also acknowledged that lawmakers are likely to consider a separate bill later in the session setting a flat tax rate of 50 cents a ride.
Consumers are theoretically supposed to pay taxes on untaxed purchases, but House Ways and Means Committee Chairman Brett Harrell, a Snellville Republican, told House members it’s impossible to collect from individual consumers.
More revenue would ease decisions facing lawmakers, including midyear budget cuts ordered by Kemp and calls for another income tax cut and teacher pay raise.
“It certainly would have an impact on the budget pressures we are all aware of,” Harrell said.
Georgia’s tax collections have lagged badly since the Republican-led legislature cut the state’s top income tax rate last year.
Lawmakers had projected $800 million more in revenue for this year’s spending plan, but revenue through six months is almost flat. Kemp has ordered midyear budget cuts of 4%, with a plan to deepen cuts by another 2% in the next budget year.
State officials estimate that tightening marketplace rules could bring in $78 million for the state and $65 million for local governments in the first year. Other estimates have suggested much greater revenue gains.
So far, 38 states and the District of Columbia require online platforms to collect taxes for third-party sellers, according to the National Conference of State Legislatures. Owners of brick-and-mortar stores strongly support tightened collections.