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Due to the U.S. Supreme Court’s recent decision overturning the 1992 Quill case, deciding for South Dakota in the Wayfair internet sales tax case, Nebraska can now collect sales taxes on internet purchases from citizens.
The interstate commerce clause of Article I of the Constitution that regulates commerce over state lines exists to protect consumers and create a level playing field for businesses. It was to stop states from protectionist practices for in-state businesses by basically creating regulatory burdens on out-of-state products. Because brick-and-mortar business had to collect a sales tax from consumers and the out-of-state use tax was not enforced, the past court’s decision actually gave out-of-state businesses an advantage that in-state businesses did not share.
Talking to main street retail business owners while campaigning in 2014, my opinion changed on the sales tax issue. Local businesses were making the merchandise sales pitch, but were losing the actual sale due partially to a 7 percent price advantage out-of-state internet retailers had. I don’t like paying taxes any more than you do, but I have formed the philosophy that in order to get tax relief for all, we first must all have a stake in the game. Sales taxes help pay for public services, streets and roads, and public education.
If you buy your products locally, you are helping to pay for those services with your sales taxes, but at the same time if your neighbor purchases a product online from an out-of-state company, they are not helping pay for those same public services they enjoy. I hold the same view on all tax policies that allow government to pick winners and losers. We all need to be in the same tax-burden boat, rowing together toward tax relief for all.
The Nebraska Department of Revenue cannot differentiate between online and local sales. Accordingly, there is no way to put an accurate number on state internet sales tax receipts; however, the Revenue Department has estimated it to be $30 million to $40 million. Once we enact proper legislation, the proceeds should eventually be put toward property tax relief, but first they need to be added to the general fund with all other tax receipts. How we collect taxes and how we spend tax dollars are two separate issues and need to have separate debates.
I do not support a special session of the Legislature to address the internet sales tax issue. The issue needs more time to be researched; the law we craft and pass must reflect the present South Dakota statute approved by the court. Also the optics to the taxpayers are not good with the Legislature rushing to Lincoln to increase taxes on consumers after we rejected Sen. Tom Brewer’s call for a special session on property taxes.
The matter can wait until January when the regular session starts. This gives the governor and interested parties time to have a well-vetted bill introduced on day one and passed with an emergency clause.
I wish to give a shout-out to Renae Brandt on her efforts toward moving the debate forward on the future of the Pawnee Hotel. We often lament that our young people do not take leadership roles in issues confronting our local government. As far as I am concerned, Renae is North Platte and she is definitely a rising community leader. It is always good to put a face on community efforts and is good policy to have more than one idea presented on community actions. Renae has my support, and in my meeting with her, she showed all the attributes of a leader. For the good of the community, I doubt she will back off the issue.
Contact Sen. Mike Groene: email@example.com or 402-471-2729.