RICHMOND, Va. -- Legislation forcing Internet retailers -- including such giants as Amazon -- to collect Virginia sales taxes is headed to the state Senate.
The Senate Finance Committee this morning approved the measure, by Sen. Emmett Hanger, R-Augusta, 10-1.
Opposed by Amazon, the bill would require online stores to impose the 4.5 percent sales tax on all purchases in Virginia.
The bricks-and-mortar stores say it's only fair that their Internet competiton collect the tax, a portion of which is kept by retailers as a commission. But because the on-line businesses can sell products tax-free, they have a leg up on traditional retailers.
The Virginia Retail Federation, which is pushng the measure, says the bill, for starters, could generate $17 million a year. Such cash could help balance the recession-wracked budget, which has a hole of $4.2 billion.
Five states, including North Carolina, have slapped the sales-tax requirement on on-line businesses.
Among the reasons the Internet retailers oppose measures such as Hanger's: They say they shouldn't have to collect these taxes because they usually don't have a physical presence in the states where the do business.
The courts have said that so-called nexus is crucial to determining whether sales taxes can be imposed. In Amazon's case, the company has facilities in Northern Virginia, the cradle of the state's high-tech industry.
The bill likely faces tough sledding. Anti-tax sentiment is high, particularly in the House of Delegates, where a fattened Republican majority is in charge. Also, Gov. Bob McDonnell has vowed to veto any tax increases and to resist a budget that relies on higher levies.
And there's a don't-forget-your-friends factor: McDonnell was endorsed for governor by the Northern Virginia Technology Council, which is leading the opposition to the Hanger bill.
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