Reaction to proposed telecommunications, internet sale tax proposals

Reaction to proposed telecommunications, internet sale tax proposals
Published: Feb. 1, 2016 at 11:17 PM CST|Updated: Feb. 2, 2016 at 3:09 AM CST
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NEW ORLEANS, LA (WVUE) - Taxes for telephones and internet purchases are among the revenue-generating ideas that Gov. John Bel Edwards has proposed.

But some worry that tax hikes could not only adversely affect individuals, but also businesses.

Edwards proposes to renew and increase the state's monthly landline and cell phone telecommunications tax. Currently, the tax is two percent for interstate services, meaning calls to someone in another state, and three percent for intrastate telecommunication services and sales of prepaid telephone cards. Edwards recently proposed a five percent rate for both.

According to the Louisiana Department of Revenue, effective April 1 of this year the tax rate on interstate telecommunications is to go down to one percent, while the tax rate on intrastate telecommunications would remain at three percent. During the 2014-2015 budget year, the three percent tax on intrastate telecommunications generated approximately $44 million and the two percent tax nearly $7 million.

"We have to get our budget back in line, running this deficit every year, it's just hurting us," said Sherri Tarr, who said she would support higher taxes given the state's fiscal predicament.

"No more state taxes, at all. It's unnecessary," said Eve Mille.

Another proposal would require sales taxes on all internet purchases. Miller said that is her primary way of buying goods.

"There are alternatives, versus upping taxes on people who are already struggling to pay, so why would you do that?" she said.

Current law requires businesses online merchandise that have a presence in the state, i.e., actual stores, offices, or warehouses, to collect the tax and remit it.

"If the business has a presence in Louisiana or delivers into Louisiana in its own trucks, it should register for and charge Louisiana sales tax on the sales it makes to Louisiana customers," the Department of Revenue's website states.

"The internet tax, we believe that the businesses that are located here, and have brick and mortar presence in Louisiana are already paying that tax, so again this is more of a fairness to collect from the national firms like Amazon," said Todd Murphy, President of the Jefferson Chamber of Commerce.

Murphy said the Chamber has not taken a position on the governor's specific proposals. However, the group is on record as it relates to federal internet sales legislation.  It would require internet retailers making a million dollars, or more in annual sales to collect taxes, whether they have a physical presence in a state, or not.

"Our organization saw that not as a new tax, but just as a fair way to collect what should already be out there in the first place," Murphy said.

Certainly internet sales show no signs of slowing down. The Census Bureau said the estimate of U.S. retail e-commerce sales for the third quarter of 2015, adjusted for seasonal variation was $87.5 billion, an increase of 4.2 percent from the second quarter of 2015.

"I'm proud of the governor actually for taking this stand," Tarr said.

"We from the business community want to hear more about what type of spending cuts we can make before we dive into revenue increases, although we do understand that there will have to be some taxes increases."

He said they are still poring over the governor's proposals and could have an official position in coming weeks.

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