Today The Official Merchant Services Blog is taking a look at a new bill proposed in Florida that attacks the growing E-Commerce industry. The bill — HB 861 — was filed by state Rep. Mike Horner, R-Kissimmee. The bill would require online-only sellers to collect and remit Florida sales taxes, just like other Florida retailers.
Bricks vs. Clicks
This legislation is drawn on the battle that has been brewing for the past decade between brick-and-mortar retailers and online entrepreneurs. Online shopping has become commonplace for the U.S. consumer, and this year’s holiday shopping season saw record business run through E-Commerce.
The Official Merchant Services Blog did a series of posts based on the strength of the E-Commerce industry. In it we reported that in recent years, the boom in online shopping created a shift in shopping trends. Holiday shoppers no longer adhered to Black Friday as the start date for their holiday shopping needs. A 2010 survey conducted by Google and OTX found that 35% of internet users start their holiday shopping prior to the end of summer, months ahead of Black Friday.This shift continued to grow in 2011 as consumers found online shopping extremely convenient.
According to a Star Tribune article from January 16, 2011, Cyber Monday sales rose 16 percent from 2009, and topped $1 billion overall –– marking the first time Cyber Monday hit the billion dollar mark. The record setting didn’t stop on Monday, according to comScore, a company that tracked the sales figures between November and December for the e-commerce industry. Sales on Thanksgiving Day were up 28 percent from the previous year, and overall e-commerce sales topped $32 billion in the holiday shopping period, a 12 percent rise from 2009. Even Black Friday, brick and mortar stores’ biggest holiday shopping day of the year, saw a 9 percent rise in e-commerce to $648 million.
2011 saw those numbers rise even higher. Statistics released from an IBM research unit called Coremetrics found that 20% more consumers shopped online this Black Friday 2011 than did in 2010. The data collected also states that 39% more online shopping happened on Thanksgiving Day itself in 2011 than in 2010.
Trying to Level the Playing Field
The boom in online shopping is what has prompted this bill to be suggested in Florida. In Florida, online retailers are escaping the burden of sales tax for their transactions. And so the bill was created to attempt to level that playing field a bit. According to this bizjournals.com article by Susan R. Miller, “Currently, Florida retailers with a brick-and-mortar location are required to collect and remit sales taxes on purchases made online, while their online-only competitors are not. The bill would require online-only sellers to collect and remit Florida sales taxes, just like other Florida retailers.”
Miller’s article says that the bill has support of the Florida Alliance for Main Street Fairness, a coalition of small businesses, trade associations and civic groups, including the Florida Retail Federation, Florida Chamber of Commerce and Associated Industries of Florida. The legislation could be part of a larger initiative this year by states nationwide that would require online retailers such as Amazon.com or Overstock.com to collect taxes for online transactions.
The article does note that the bill faces one large obstacle in the local legislature: “However, Senate President Mike Haridopolos has said that such a plan would violate the Florida Legislature’s “no new taxes” pledge and would not pass if it resulted in a net increase in taxes collected by the state.”
Is This the Future?
The suggestion that this is part of a large initiative to attack E-Commerce giants like Amazon and Overstock is certainly of interest. Especially since a large scale move such as that would have a deeper impact on all of the smaller Online Shopping sites that small business people run around the U.S. But there’s some key facts to keep in mind before getting too worried that this is the next big thing like the Durbin Amendment was in 2011:
- This is a state bill, not a federal proposal. That means that this is still a very small scale approach.
- Florida law isn’t exactly cutting edge. Not to be flippant, but there’s a reason why snarky internet commentary site Fark.com gives Florida its own subject tag.
- The bill itself does, as the story states, face some opposition in its own state legislature because of the tax issues.
You can review the exact language of the bill by downloading the PDF here.