Four days into the 2020 General Assembly session the lawmakers agreed to a new internet and app sales tax measure that could provide a major boost to the state’s shaky bottom line.
House and Senate leaders agreed Thursday morning to legislation aimed at forcing “marketplace facilitators” whose websites or apps are used to sell goods or services provided by someone else to collect and remit sales taxes. It would go into effect April 1.
Different versions of the bill passed the chambers last session, but the two sides couldn’t strike a deal.
A report in June by a group called the Faith, Justice and Truth Project said the state is losing nearly $750 million a year in sales taxes not collected from such online “marketplace facilitators” of sales.
The state’s estimate on the measure is closer to $150 million a year—according to an accounting for House Bill 276 — which would have closed the loophole in collecting such taxes. More than 30 states have similar tax laws.
“This money is owed. There hasn’t been an efficient way to collect it,” said Senate Finance Chairman Chuck Hufstetler R-Rome.
The measure stalled in the Senate last year when lawmakers added a special deal - called a “carve out” because it means it doesn’t apply to select businesses - for Uber, lawmakers said.
This time around, Hufstetler said, “There is no special deals for anybody.”
However, Uber lobbyists are expected to push a separate bill to change how customers are taxed.
House Ways and Means Chairman Brett Harrell, R-Snellville, the measure’s sponsor, and Hufstetler said the bill, if signed into law by Gov. Brian Kemp as expected, would put internet- and app-based companies on par with Georgia stores that have always charged sales taxes for their goods.
Uber spokeswoman, Evangeline George, said, “We agree that addressing inequities between online and brick and mortar retailers is an important issue. However, if action is not taken to put a reasonable fee structure on rideshare in place, Georgians will end up paying one of the highest rideshare taxes in the nation.”
The state may need the revenue to avoid further budget cuts. Tax collections have been slow since shortly after the General Assembly voted to cut the top state income tax rate in 2018.
The state reported Monday that collections are up 0.3% for the first six months of fiscal 2020, which began July 1. Income tax collections alone are tracking about $300 million less than expected, analysts say.
Kemp ordered state agencies in August to cut their budgets 4% this year and 6% next year. Ever since then, lawmakers have been looking for ways to raise revenue.
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