Lansing — Amazon and other online retailers with ties to Michigan would have to collect its 6 percent sales tax on purchases under legislation approved Thursday by a divided Senate.
Backers say the bills would level the playing field because brick-and-mortar businesses must assess the tax on customers.
The legislation was sent to the Republican-led House for its consideration in the waning days of the legislative session. It won approval on a 21-16 vote in the GOP-controlled Senate, picking up support from 11 Democrats and 10 Republicans.
Wal-Mart and other stores in Michigan must collect the sales tax when selling goods over the Internet.
Shoppers currently are required to pay unpaid “use” taxes on online, catalog, mail- and telephone-order purchases when they file their state tax returns. But few taxpayers comply, paying less than $6 million this year.
The state Treasury Department estimates that $482 million in revenue from remote sales went uncollected in the last fiscal year. The bills could raise in the ballpark of $50 million a year from Amazon, Overstock, eBay and other Internet retailers with a “nexus” to the state.
Sen. Mike Kowall, a White Lake Republican, said customers visit his family’s custom kitchen and bath cabinetry business and spend hours having plans designed.
“They then go online and order a $30,000 kitchen,” he said. “That’s $30,000 worth of sales tax that’s not going to our schools. … This will help put an end to this.”
Sixteen Republicans voted against the legislation, which conservative activists say is a tax increase that would raise prices.
Sen. Patrick Colbeck, a Republican from Wayne County’s Canton Township, said he does not object to the concept of subjecting online retailers to the same tax that other businesses must pay.
“I’ve not had time to review these bills,” he said. “There could be unintended consequences on the details of this bill that I want to make that we evaluate.”
It may be no coincidence the bills are advancing now. Lawmakers could include taxes on Internet sales in the mix during ongoing talks over raising at least $1.2 billion a year more for roads and other transportation infrastructure.
Senate Majority Leader Randy Richardville, a Monroe Republican, said he held a vote on the legislation because it was the “right thing” to do regardless of road funding negotiations.
“This has been a freebie for people for a long time,” Richardville said. “It’s not a new tax. We’ve got laws that are on the books. People have been bypassing those laws and it’s time to pay the taxes that are due. Nobody likes taxes, but if they’re owed they’re owed.”
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