Ryan backs ‘concept’ of online sales tax

Rep. Paul Ryan (R-Wis.) supports the principle that online retailers should have to pay state sales taxes.

“I think the concept is right,” Ryan, the chairman of the House Budget Committee, said at a town hall meeting earlier this week, according to the Wisconsin Reporter.

In an emailed statement to The Hill, Ryan clarified that he does not support the Senate’s legislation on the issue.

{mosads}”It’s got to be done the right way. I think the legitimate concern is can it be used to do other forms of taxation or retroactive taxation? You have got to make sure it doesn’t do that. I don’t think the Senate bill is written in a tight enough way to do that,” Ryan said.

He added that it’s unfair for a local brick-and-mortar retailer to have to collect sales taxes when online competitors are exempt.

“So I’d like to think there’s a way to address this inequity without giving the government power to expand taxing authority beyond that intent. You’ve got to do it the right way,” Ryan said.

Under current law, states can only collect sales taxes from retailers that have a physical presence in their state. People who order items online from another state are supposed to declare the purchases on their tax forms, but few do.

The Senate’s bill, the Marketplace Fairness Act, would empower states to tax out-of-state online retailers, but would exempt small businesses that earn less than $1 million annually. The Senate is expected to vote on the bill next week.

The proposal has the support of retail lobbying groups and a host of governors, including Republicans Chris Christie of New Jersey, Rick Snyder of Michigan and Bob McDonnell of Virginia. Passage of the bill could bring billions of dollars in new revenue to state governments.

But anti-tax groups such as Heritage Action, Americans for Prosperity and Grover Norquist’s Americans for Tax Reform are rallying opposition to the measure, saying it would be complicated to enforce and would stifle online commerce.

The Senate is expected to approve the sales tax bill next week.