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Pingree and LePage in Rare Agreement on Internet Sales Tax Issue
06/12/2012   Reported By: Tom Porter

A proposal to tax Internet sales is causing some unusual political lines to be drawn in Maine. Earlier this year, Maine Gov. Paul LePage joined other GOP governors in urging support for the Marketplace Fairness Act, which would allow states to collect tax on sales over the Internet. But so far, the only member of Maine's Congressional delegation to back the measure is Democratic Rep. Chellie Pingree. And Pingree and LePage rarely see eye-to-eye on issues.

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A proposal to tax Internet sales is causing some unusual political lines to be drawn in Maine. Earlier this year, Maine Gov. Paul LePage joined other GOP governors in urging support for the Marketplace Fairness Act, which would allow states to collect tax on sales over the Internet. But so far, the only member of Maine's Congressional delegation to back the measure is Democratic Rep. Chellie Pingree. And Pingree and LePage rarely see eye-to-eye on issues.

A few months ago, the governor wrote to Maine's two U.S. senators, fellow Republicans Olympia Snowe and Susan Collins, calling on them to lend "strong support" to the Marketplace Fairness Act. In it, he said there's a "damaging inequity" in the retail marketplace, between online operators and their "bricks and mortar" competitors.

A former retailer himself, LePage says most retailers "love competition" because it sharpens their services and products. But he says that competition has to be fair.

LePage wasn't available to speak to MPBN for this story, but in a recent interview with Capitol News Service, he stressed that the legislation does not raise taxes--it merely provides a tool for the collection of taxes that are theoretically already due.

"My feeling is if you buy it on the Internet, then Internet retailers who are making a profit ought to be able to remit the taxes to respective states," LePage said.

Even though online sales are technically subject to sales tax, the vendor is not currently required to collect it. The tax is only collected in states where the online retailer has a physical presence, like a warehouse or corporate offices.

Despite the governor's plea, Maine's two senators have not yet taken a firm position on the Marketplace Fairness Act. But they do appear to be leaning in different directions.

Susan Collins says she supports the principle behind the legislation. "I believe that the governor and Main Street retailers raise an important point: that a lot of times, Internet sales avoid the sales tax that is due in a state," she says.

That sales tax, she says, is already legally required, but very few consumers actually pay it, because it's not enforced. "So I think there is a real question of a competitive disadvantage that Main Street retailers face compared to their competitors who are selling the same exact goods through the Internet," Collins says.

Sen. Collins says she does worry about the possible effect on small, home-based businesses. It would be a tremendous burden, she says, for small operators to collect sales taxes in all 50 states. "So I think we've got to make sure that the threshold in the bill is high enough so that small, home-based businesses are not overwhelmed with additional paperwork," a burden, Collins says, that could put them out of businesses.

The bill proposes an exemption for businesses with sales of less than half-a-million dollars a year. While Sen. Collins welcomes this, she still has not decided whether to endorse the measure.

Sen. Olympia Snowe has also not yet taken a formal position on the measure. But she seems even less keen on it than Sen. Collins. "This would not the time to impose another layer of taxes," she says. "I think this is something to be perhaps worked out for the future."

But to impose them now, she says, could harm the fragile economic recovery. "If you allow these taxes to occur across the Internet it could raise some serious questions about what the effect would be on the economy."

Democratic Congressman Mike Michaud, from Maine's 2nd District, is also uncommitted. In a recent statement, he says he's continuing to collect information from businesses in his district that would be affected by the Marketplace Fairness Act and reviewing their responses.

So far only Democratic Congresswoman Chellie Pingree has taken the governor's side in the debate. Pingree co-sponsred the House version of the Marketplace Fairness Act. She says the issue is coming to a head.

She says the issue is coming to a head "because people are ordering more and more online, and we're seeing the demise of local businesses. I mean you go to almost any community today and you can see where the bookstore used to be. And it doesn't exist anymore because people can shop online and not pay sales tax for that book. So why should we put our own merchants on Main Street on an unlevel playing field? It just seems like a fairness issue."

The Maine Merchants Association, which supports all efforts to collect online sales tax, estimates that the state is losing at least $30 million a year in lost online sales tax revenue.



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