••• Tax & Spending •••

Online sales tax a ruse to grow government

A controversial online sales tax proposal would increase government revenue and spending by an estimated $93 million annually.  Online purchases from retailers with a physical presence in Kansas (‘nexus’) are already subject to sales tax and brought in over $400 million last year, with about $175 million from individuals and the balance from business purchases.  The proposal in HB 2756 expands the definition of nexus to include the placement of a ‘cookie’ on the buyer’s computer or other electronic devices.  The proposal would apply to out-of-state retailers with more than $50,000 in annual sales.

It’s not known who proposed HB 2756 or which committee members voted to recommend the bill for consideration by the full House; House Taxation Committee minutes merely say the motion to introduce the bill was made by Rep. Shannon Francis and seconded by Rep. Jack Thimesch.

Supporters, including local government and some local chambers of commerce, say the bill will increase tax revenue and addresses a fairness issue.  They say out-of-state retailers with no Kansas presence have a price advantage by not having to charge sales tax, but such sales are already subject to taxation in Kansas.  Some purchasers don’t remit the tax due but that’s a collection issue; the more than $400 million in annual use tax collections indicates most purchases are being reported.

If new revenue from HB 2756 was to be used to reduce the tax rate on all purchases or on specific purchases such as groceries, the fairness angle might be understandable.  But the proposal would merely raise more tax revenue, making this really about growing government.

The better way to address the fairness issue would be to reduce wasteful spending in state and local government and charge lower tax rates.  The Tax Foundation says Kansas has the 8th highest average state and local sales tax rate in the nation.  One must wonder how many sales are being lost by Kansas retailers as a result of people driving a few miles to Missouri, Colorado and Nebraska where sales taxes are lower.  Excessive tax rates is a fairness issue that affects every Kansan, but few elected officials seem to care about that one.