Utah lawmakers killed an attempt Wednesday to prevent windfall spending if Congress allows states to force all online retailers to collect and give them sales tax on items bought by residents.
HB224 would have forced Utah to lower sales tax rates across the state by an amount equal to the extra revenue that would come from those online retailers. But the House voted it down 47-26.
"Are we about gathering any revenue we can, or are we about fiscal responsibility?" asked Rep. Jim Nielson, R-Bountiful, the bill’s sponsor.
He argued that collecting the tax would be a drag on the economy — and extra tax revenue should be used to lower rates instead of increase spending.
Rep. Jon Standard, R-St. George, agreed. "If we collect it, we spend it. Always." He said such a bill was the only way to prevent expanding spending, because it is too difficult to drop rates once such money starts to be collected and spent.
But Rep. Joel Briscoe, D-Salt Lake City, noted that the tax is already owed by people who make such online purchases. They are supposed to pay it through their income-tax return, although few do.
Only online retailers that have a physical presence in Utah are legally required to collect and remit sales tax for the state and local government, although Congress is considering changing that.
Briscoe said that while Utah is struggling with funding education, transportation and other issues, it should not forfeit money already owed — if Congress ever acts.
Several other lawmakers echoed that it is premature to decide how to use that money before it’s collected.
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