Texas Gov. Rick Perry killed his first bill of the year, which would have taxed retailers conducting online business in Texas, citing that the measure would cause “unintended consequences.”
The state government passed a Texas House of Representatives bill earlier in May that would have required online retailers with a distribution center or warehouse in Texas to collect state sales taxes. The measure became heated last year when State Comptroller Susan Combs tried to collect $269 million in back taxes from Amazon, Inc.
Combs argued that the Seattle-based e-commerce giant needed to pay its share of taxes, while Amazon claimed that the company’s distribution center in Irving was owned by a legally separate entity with a similar name. The proposed bill would have expanded the definition between Amazon and its distribution center as a contractual agreement that would have been taxed. Combs said the state loses an estimated $600 million annually from untaxed online sales.
Perry said in a statement from his office that he would pursue several recommendations before making any further decisions.
“My strong preference is to conduct a thorough policy discussion with Texas lawmakers, consumers, retailers and technology experts,” said Perry in his release. The governor also claimed he would pursue opinions from “other states, and even the federal government, about interstate commerce and the structure of state sales taxes in the 21st century.”
Amazon and other big online retailers threatened to leave Texas if the bill became law.
The bill may be dead, but the Internet tax efforts are also built into a fiscal bill that is included on the agenda for a special session at the State Capitol in Austin this weekend.
Four state governments across the U.S. have passed similar Internet tax legislation and the measure is pending consideration in 13 more. Online merchants have already filed suit against an Internet tax law in New York and canceled contracts with companies in Illinois.
A separate measure was recently introduced in the U.S. Senate to establish a standardized approach to sales tax collection from Internet sales.
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