A bill that would have Utah tax online sales to level the playing field with brick and mortar outlets in the state barely passed through the Senate Wednesday despite concerns from some legislators that the state would be sued for putting the law in place.
Sen. Wayne Harper, R-Taylorsville, sponsored SB226 that only passed when Senate President Wayne Niederhauser, R-Sandy, put it over the top 15-12. A minimum of 15 votes are required to pass the 29-member Senate.
Harper said he wanted to help local businesses in Utah who might lose potential customers who bypass stores to save on not paying taxes online while also making sure the state doesn’t lose out on revenue.
"I’m running it to ensure we control our own state tax policy," Harper said.
Taxation of Internet purchases has been viewed as an issue for Congress since a 1992 U.S. Supreme Court ruling against state taxation of mail-order sales. Sen. Todd Weiler, R-Woods Cross, said he believed Congress was poised to act on the matter and that the state was "inviting a lawsuit’ by the federal government because the measure violates the commerce clause of the Constitution.
On Tuesday night, upon its preliminary passage, he urged senators to read the legislative analysis attached to bill. In it, the Office of Legislative Research and General Counsel said the bill puts an additional burden on sellers not physically present in the state.
"We will be sued. You all know by whom," Weiler said. "We are buying a lawsuit by passing this bill. It doesn’t make sense when Congress is on the verge of acting."
And Sen. Steve Urquhart, R-St. George, said it was an "economy killer."
Sen. David Hinkins, R-Orangeville who opposed the preliminary passage Tuesday, supported it Wednesday, saying it was a way to show other potential businesses who might relocate to Utah that the Legislature would back their interests.
Several lawmakers struggled with the vote, including Sen. Aaron Osmond, R-South Jordan, who tried to pass on the vote twice. He ultimately voted for it.
Congress is looking at the Market Place Fairness Act of 2013 — a bill allowing states to collect sales tax from Internet purchases.
The bill now moves to the House.
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