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April 22. 2013 9:37PM

Ayotte leads opposition to Internet sales tax

President Barack Obama voiced his support for an Internet sales tax, while eBay rallied its millions of users to fight the legislation.

Senate Majority Leader Harry Reid used a parliamentary maneuver to bypass the committee process and speed up consideration of the sales tax legislation, setting the stage for a Senate vote on whether to begin debate.

The measure cleared a legislative hurdle in the Senate on Monday when 74 senators voted to limit debate and move forward with a final vote on the proposed legislation in the Democratic-controlled Senate, likely on Wednesday.

U.S. Sen. Kelly Ayotte, R-NH, said she would continue to lead the opposition.

"Supporters of this online sales tax bill are trying to muscle it through before senators find out how disastrous it would be for businesses in their states," said Ayotte. "I will fight this power grab every step of the way to protect small online businesses in New Hampshire and across the nation."

U.S. Sen. Jeanne Shaheen, D-NH, is also opposed to the measure as written, suggesting there should at least be an exemption for states with no sales tax.

"I strongly oppose this measure because it would put a serious burden on small businesses that rely on the Internet to tap into growing markets, expand their operations, and create jobs," she said. "Considering the myriad of problems with this legislation -- including the absence of protections for small businesses in states without a sales tax -- I have urged Senate leadership to consider this bill under regular order instead of fast-tracking it as they're doing this week. I intend to file amendments to this bill to improve it because the Senate isn't properly considering the ramifications of this measure."


Joined with Shaheen

Late Monday afternoon, Shaheen and Ayotte co-signed a letter to Reid, along with five other senators, in a bipartisan effort to stop expedited consideration and put the bill through the regular committee process.

The bill requires the operators of online businesses that generate more than $1 million in revenue each year to collect sales taxes on transactions from customers who live in sales tax states.

If the bill becomes law, New Hampshire residents would not have to pay sales taxes on their Internet transactions, since the state is one of five without a sales tax. But New Hampshire merchants who sell more than $1 million a year in online goods or services would have to collect the tax on transactions originating from states, counties or cities with sales taxes.

The Marketplace Fairness Act has broad support among sales-tax states that stand to collect more than $11 billion in new revenue if the measure becomes law. The National Conference of State Legislatures has lobbied hard for the bill since late last year.

The bill's chief sponsor, Sen. Dick Durbin, D-Ill., second-ranking Democrat in the Senate, was able to demonstrate that he has a filibuster-proof majority after a largely symbolic vote of 75-24 in support of the measure on March 22.

The following week, Sen. Ayotte met with online retailers in Manchester and Portsmouth to enlist their continued support in her fight against the measure.

"I'm concerned about it, but I still think we can turn this around," she said at the time. "A lot of senators are just formulating their position for the first time, and because this is a revenue measure, it would have to originate in the House. We will have the opportunity to let House members know how bad this is for business in this country."

Prospects are less certain in the Republican-controlled House of Representatives, where many members consider it a new tax.

Brick-and-mortar retailers like Walmart and Best Buy support the measure, while online giants like eBay and Overstock are lined up in opposition. Amazon, which offers its own tax-collection services for online retailers, once opposed the idea, but now is lobbying in favor.

New Hampshire Republican Party Chairman Jennifer Horn called on New Hampshire Democrats to reject the internet sales tax bill. Horn noted in a news release Monday that the National Conference of State Legislatures (NCSL) has endorsed the legislation and New Hampshire House Speaker Terie Norelli, D-Portsmouth serves as the president of the NCSL.

Lobbyists on both sides were working furiously amid several new developments on Monday, including the endorsement from the President. White House spokesman Jay Carney said the bill "will level the playing field for local small business retailers who are undercut every day by out-of-state on-line companies."

In an email to the site's sellers, eBay CEO John Donahoe wrote that the bill would penalize small online businesses. "Are you prepared to collect sales taxes in the more than 9,600 tax jurisdictions across the U.S.? Are you prepared for the potential to be audited by out-of-state tax collectors? These burdens would be the result of proposed legislation," Donahoe wrote.

The Securities Industry and Financial Markets Association also came out in opposition to the bill on Monday, saying it could lead to a state-level financial transaction tax and "unexpected" consumer costs.

The Retail Merchants Association of New Hampshire, which represents both online and brick-and-mortar retailers, voted two years ago to remain neutral on the issue, according to President and CEO Nancy Kyle.

dsolomon@unionleader.com


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