PHOENIX (AP) — The Arizona House of Representatives has for the second time voted down a bill that would have reduced income taxes to offset new collections from online sales.
House Bill 2465, introduced by Republican Rep. J.D. Mesnard of Chandler, would require state tax authorities to determine how much in new sales taxes were collected in online sales in the first year and reduce the following year's income tax rate by the same amount. Estimates of revenue from Internet sales tax vary from $100 million to more than $700 million in additional state and local sales tax dollars per year.
People who purchase items online now owe state sales taxes, but there's no way for the state to enforce that requirement. Part of an overhaul of the state's business sales tax collection system last year would allow Arizona to collect those taxes if the U.S. Congress passes the Marketplace Fairness Act. The proposal has passed the senate but awaits action in the U.S. House.
Mesnard said collecting taxes on internet sales is essentially a new tax because it has never been enforced. Democrats argue that doing those collections is just closing a loophole.
Mesnard said taxpayers already pay enough. He implored legislators who had voted against his bill to reconsider.
"I think most of our constituents will be outraged," he said.
Rep. Ethan Orr, R-Tucson, said he wasn't comfortable voting for a bill that would offset taxes that are not collected yet.