Editorial: Apply state sales tax to online sellers located outside state

Apparently there is bipartisan legislative support to pass a sales tax on online purchases made in Minnesota to online sellers located outside the state, like Amazon.

Don Heinzman
Don Heinzman

This makes so much sense because it would bring in a badly needed extra $5 million this year and more next year.

Critics will say it would be a tax on business, but it is only on businesses located outside the state that are benefiting from online sales by not being required to pay the applicable state sales tax.

This bill wouldn’t be the cure-all on having a sales tax on all on-line purchases, but it would expand the area to include affiliate marketers.

These are businesses that advertise for Amazon.com and other online merchants. And it would apply to affiliate marketers whose commissions on referrals from online merchants are more than $10,000.

The Minnesota Retail Federation supports this, because local shoppers find what they want on site at so-called brick and mortar stores in the state, put it in their shopping cart and buy it online where it’s cheaper.

One reason it’s cheaper is there is no state sales tax on purchasing the item.

That puts the local home-grown store at a disadvantage, because it has to apply the sales tax on the same item.

Some legislators are dragging their feet on this, because they favor a proposed federal law that would make the playing field equal across the country.

That obviously is the better solution, but it will be a while before that law is passed.

If the Minnesota Legislature passed this measure, there is a good chance Gov. Mark Dayton will sign it.

Editor’s note: Don Heinzman is editorial writer for ECM Publishers Inc.