Lt. Gov. Tate Reeves said Monday that the Mississippi Senate will reject House legislation that would force retailers to collect taxes on internet sales and earmark the money for road and bridge work.
Reeves told reporters Monday that House Bill 480 will die in committee Tuesday, at the deadline for committees to act on bills originating in the opposite chamber. That means lawmakers are unlikely to offer any new earmarked stream of revenue for transportation spending this year, although they could still choose to borrow money as a one-year stopgap.
Taxing internet sales has been a subject of debate in Mississippi for years. The state already imposes a 7 percent use tax, which buyers are supposed to voluntarily pay. While businesses often pay tax for large purchases, officials said Wednesday that consumers paid only $250,000 last year. They said the state could be missing out on as much as $100 million or $150 million a year in revenue.
A Republican, Reeves said he opposes the House bill because it defies decades of U.S. Supreme Court precedent saying states can’t force companies without an in-state presence to collect taxes.
“We believe it’s unconstitutional.” Reeves said.
He said that until the Supreme Court changes its mind, it doesn’t make “very much sense” for Mississippi to pass such a bill, even though proponents have said sparking a court challenge along with other states is part of their plan. Reeves described the promise of immediate new revenue as “fake money” because of the likelihood of litigation.
Reeves’ announcement doesn’t mean Mississippi will cease trying to tax all internet sales. Revenue Commissioner Herb Frierson is proposing an administrative rule requiring all large sellers to collect taxes, after getting Amazon.com to start collecting voluntarily. Frierson says he has authority under existing law to make the administrative proposal, citing a 1988 state law.
Reeves also said the measure would divert $40 million in existing use taxes already collected from Mississippi businesses, a number Revenue Department spokeswoman Kathy Waterbury confirmed.
“We don’t think this is a good time to be transferring $40 million out of the general fund,” Reeves said, alluding to state revenue shortfalls.
Last year, Reeves pushed a bill that could have allowed lawmakers to raise fuel taxes for roads, but the House didn’t act.
House Speaker Philip Gunn, R-Clinton, had described the plan, which lawmakers hope would raise more than $100 million, as the “last train out” for road funding this year. Business groups and transportation officials have been pushing lawmakers to increase funding by as much as $500 million. Monday, Gunn said the House stands by its proposal.
“The House is about finding a solution and we’ve delivered on that promise. We brought forward a proposal and we’re about fixing roads and bridges.”