(April 24) – Speaker Mark Ferrandino’s bill to help Colorado’s brick-and-mortar businesses, support Colorado jobs and add vibrancy to retail areas across the state advanced today when the House Finance Committee voted 7-6 in favor of HB13-1295.
The bill would set up the Colorado framework for the federal Marketplace Fairness Act, which passed its first procedural hurdle in the U.S. Senate with wide bipartisan support this week and is given a fair chance of passing Congress this year.
The federal bill would allow states to require online and catalog retailers, no matter where they are located, to collect the buyer’s applicable sales taxes – exactly like local retailers are already required to do. Software now exists to calculate the state and local sales tax for every address in the country.
“Allowing remote sellers to have a 7 percent advantage to the brick-and-mortar companies and Main Street stores throughout this state is hurting those stores and those companies and this state,” Speaker Ferrandino told the committee. “There is an equity issue here.”
Under his bill, online sellers with less than that $1 million in Colorado sales would be exempt.
No one testified against the bill. But an online retailer testified in favor. He was joined by representatives of the Colorado Municipal League, the Colorado Retail Council and the Denver Metro Chamber of Commerce. Others, including the Colorado Fiscal Institute, have also expressed support.
One consequence of eliminating online sellers’ tax advantage would be the decline of “showrooming,” where consumers go shopping in their local store, often engaging the services of a salesperson, and then go home – or pull out their smartphones – and buy online.
The state sales tax currently provides about 27 percent of Colorado’s general fund, which helps pay for programs such as health care for the underprivileged, education at all levels and services for the disabled. Local sales taxes help keep our public libraries open, our streets maintained and plowed, our parks landscaped and free of litter, and Colorado’s beautiful natural lands protected as open space.
A 50-state study from the University of Tennessee estimated that Colorado’s state and local tax revenue losses from uncollected e-commerce sales totaled $173 million in 2012, including $73 million in general fund revenue.
Rep. Ferrandino’s bill now goes to the Appropriations Committee.