By Bill Poovey
Published May 8, 2013
South Carolina’s two U.S. senators, Republicans Lindsey Graham and Tim Scott, have disagreed in a vote that would allow states to decide if online businesses should collect sales taxes the same as its brick-and-mortar competitors.
Sen. Lindsey Graham
Sen. Tim Scott
The Marketplace Fairness Act would allow South Carolina and other states with sales taxes to require that large online retailers collect the tax on purchases by their residents. The legislation would apply only to online sellers with sales of at least $1 million outside of states where they have a physical presence.
States now can only require retailers to collect sales taxes if the store has a physical presence in the state.
Scott in a statement Wednesday said the measure “would generate significant compliance costs that small business owners simply can’t afford.”
He said he favors instead creating “an environment that allows small businesses to unleash their potential by lowering taxes and repealing burdensome regulations."
Graham said in a statement that “no new taxes will be imposed as a result of this legislation. The bill provides for the collection of state taxes, that in most cases, are already owed by the consumer. The Marketplace Fairness Act simply puts brick-and-mortar businesses on a level playing field with Internet retailers.”
The measure allows South Carolina and other states the “flexibility to collect the revenues that are due if they choose to do so,” he added.
The vote sends the legislation to the House, where other Republicans are also split. President Obama has said he supports it.