The added money from it would be used to restore tax-free shopping days for parents buying school supplies.
A subcommittee held a hearing Tuesday morning on House Bill 993 that would only tap about one-tenth of the online sales, according to industry estimates. That would generate about $18 million which would be entirely offset in the sales-tax holiday, resulting on no additional revenue for the state, according to the bill’s sponsor, Rep. Matt Ramsey, R-Peachtree City.
“Make no mistake, this is a big deal,” he said.
The bill doesn’t tax all transactions, only those conducted through websites based in Georgia and considered “affiliates” of the national retailers. An affiliate gets a commission for sales generated from ads on their sites.
He compared shopping with an affiliate to buying a car from a dealer who orders it from the manufacturer rather than selling it out of a local inventory. The car dealer would still collect the sales tax.
Rick McAllister, president of the Georgia Retail Association, said traditional, “brick and mortar” merchants have been at a disadvantage in competing with the affiliates because consumers see a 7 percent price difference since the tax isn’t included.
“We could fill this room with your friends, your neighbors, who are suffering under this inequity,” he said.
The association is eager to see Congress enact legislation establishing a nationwide system for collecting state sales taxes on all online transactions, but that proposal has been pending for years with no immediate signs of passage. In the meantime, he supports Ramsey’s plan.
“This is a giant, first step,” McAllister said.
Home Depot already collects the sales tax from its online sales and supports the bill.
However, Greg Hoffman, an Internet marketing consultant and member of the Performance Marketing Association, said the bill would harm 6,000 small-business owners who serve as affiliates.
“The problem with this bill is, if this bill passed, probably 1,000 online merchants will sever their relationship with affiliates,” he said.
Gov. Nathan Deal told members of the Georgia Press Association last month he was considering similar legislation. While the governor didn’t sponsor HB 993, Ramsey said Deal supports it.
Subcommittee Chairman Ben Harbin, R-Evans, said the panel will vote on the measure at its next meeting, setting up consideration before the full Ways and Means Committee in time for the bill to get it to the entire House before the March 7 Crossover Day deadline.